Internationalization of Renminbi as a Function of China’s Foreign Exchange Policy

Abstract

This article discusses the prospects of the Chinese renminbi (RMB) to expand its sphere of influence and become a full-scale reserve world currency. The methods used in the article are retrospective analysis and graphic analysis. The work is divided into three sections. The first section provides a broad overview of modern reserve currencies. The second part characterizes RMBs shaping as a reserve currency, as well as inner and outer factors that influence its status. The third section includes information about RMBs current status and its perspectives for being a reserve currency in the future. The article argues that currently RMB has already become a regional reserve currency in Asia-Pacific. Chinese government continues to make steps towards international expansion of RMB, yet these steps cannot make RMB one of the leading world currencies together with USD and EUR in the nearest decade.

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RUDN Journal of Political Science 2021 Vol. 23 No. 2 233–242
Вестник РУДН. Серия: ПОЛИТОЛОГИЯ http://journals.rudn.ru/politicalscience
THE RISE OF CHINA: FOREIGN POLICY AND DOMESTIC DEVELOPMENT 233
ВОЗВЫШЕНИЕ КИТАЯ:
ВНЕШНЯЯ ПОЛИТИКА И ВНУТРЕННЕЕ РАЗВИТИЕ
THE RISE OF CHINA:
FOREIGN POLICY AND DOMESTIC DEVELOPMENT
DOI: 10.22363/2313-1438-2021-23-2-233-242
Research article / Научная статья
Internationalization of Renminbi as a Function
of China’s Foreign Exchange Policy1
K.E. Chernilevskaya
National Research University Higher School of Economics, Moscow, Russian Federation
Abstract. This article discusses the prospects of the Chinese renminbi (RMB) to expand its
sphere of influence and become a full-scale reserve world currency. The methods used in the article
are retrospective analysis and graphic analysis. The work is divided into three sections. The first
section provides a broad overview of modern reserve currencies. The second part characterizes
RMB’s shaping as a reserve currency, as well as inner and outer factors that influence its status. The
third section includes information about RMB’s current status and its perspectives for being a
reserve currency in the future. The article argues that currently RMB has already become a regional
reserve currency in Asia-Pacific. Chinese government continues to make steps towards international
expansion of RMB, yet these steps cannot make RMB one of the leading world currencies together
with USD and EUR in the nearest decade.
Keywords: reserve currencies, Chinese Renminbi, CNY, SDR basket, RMB’s status
For citation: Chernilevskaya, K.E. (2021). Internationalization of renminbi as a function of China’s
foreign exchange policy. RUDN Journal of Political Science, 23(2), 233–242. (In Russian). DOI:
10.22363/2313-1438-2021-23-2-233-242
Интернационализация юаня
как элемент валютной политики Китая
К.Е. Чернилевская
Национальный исследовательский университет «Высшая школа экономики»,
Москва, Российская Федерация
Аннотация. Рассматриваются перспективы китайского юаня в части расширения его
влияния и становления в качестве мировой резервной валюты. Методы, используемые в
© Chernilevskaya K.E., 2021
This work is licensed under a Creative Commons Attribution 4.0 International License
https://creativecommons.or
g
/licenses/b
y
/4.0/

Чернилевская К.Е. Вестник РУДН. Серия: Политология. 2021. Т. 23. № 2. С. 233–242
234 ВОЗВЫШЕНИЕ КИТАЯ: ВНЕШНЯЯ ПОЛИТИКА И ВНУТРЕННЕЕ РАЗВИТИЕ
статье, – ретроспективный анализ и графический анализ. Приводится общее описание совре-
менных резервных валют. Далее описывается увеличение доли юаня в корзине специальных
прав заимствования (СДР), а также внутренние и внешние факторы, влияющие на его статус.
Представлена информация о текущем состоянии юаня и его перспективах стать мировой ре-
зервной валютой в будущем. Автор приходит к выводу, что в настоящее время юань можно
назвать региональной резервной валютой в Азиатско-Тихоокеанском регионе. Китайские
власти продолжают делать шаги в направлении международной экспансии, однако этот факт
не сделает юань конкурентоспособным по сравнению с долларом США и евро в ближайшее
десятилетие.
Ключевые слова: резервные валюты, китайский юань, юань, корзина СДР, статус юаня
Для цитирования: Chernilevskaya K.E. Internationalization of renminbi as a function of China’s
foreign exchange policy. Серия: Политология. 2021. Т. 23. № 2. С. 233–242. DOI: 10.22363/
2313-1438-2021-23-2-233-242
Introduction
In the late 2010s, the Renminbi (RMB) became the third largest currency in
the Special Drawing Right (SDR) valuation basket (10,92%) after the euro (EUR)
(30,93%) and the United States dollars (USD) (41,73%)1. However, its further
boosting is limited for several reasons, including the absence of floating course and
free convertibility as well as the lack of intentions from the international financial
system to diversify the structure of reserves. Above all, the Chinese government
strictly controls the exchange rate of the national currency and practice financial
interventions with the help of the huge currency reserves (a policy that Donald
Trump once called “currency manipulation”)2. Given these limitations, many
experts argue that USD is not going to leave its dominating position among reserve
currencies in the nearest decades [Bowles, Wang 2013]. Yet, emerging multilateral
projects, such as the Belt and Road Initiative (BRI) and ASEAN+3 (China, Japan,
and Korea), intensify trade links between China and other member-countries,
increasing the role of RMB [Kurien, Geoxavier 2020].
The history of reserve currencies
In the 1860s, in the era of the gold standard, the British pound sterling was a
dominating currency in international trade, because the United Kingdom (UK) was
the largest exporter of manufactured goods and services. The UK hegemony came
to an end once the confidence in the Pound sterling fell short after the collapse of
Austria’s and Germany’s largest banks and the UK’s budgetary and political
challenges of 1931.
1 International Monetary Fund. (2021). Data, Currency Composition of Official Foreign Exchange
Reserves (COFER). Retrieved February 08, 2021, from http://data.imf.org/?sk=E6A5F467-C14B-
4AA8-9F6D-5A09EC4E62A4.
2 Imbert F. (05.08.2019). Trump accuses China of ‘currency manipulation’ as yuan drops to lowest
level in more than a decade. CNBC. Retrieved January 17, 2021, from https://www.cnbc.com/
2019/08/05/trump-accuses-china-of-currency-manipulation-as-yuan-drops-to-new-low.html.

Chernilevskaya K.E. RUDN Journal of Political Science, 2021, 23(2), 233–242
THE RISE OF CHINA: FOREIGN POLICY AND DOMESTIC DEVELOPMENT 235
The Bretton-Woods system, emerged after World War II, has kept the entire
international financial architecture tied both to gold and the USD through a fixed
exchange course till the mid-1970s. The primary reason of its success was
exceptionally high unemployment and inflation rates for the given level of output
during the early phase of the cyclical upswing in industrial countries3. The result
was the Triffin dilemma that implied a controversy between inflows and outflows
in the current account of Balance of Payments (BoP) when it comes to a choice of
short-run domestic or a long-run international monetary policy.
The collapse of the Bretton-Woods institutions led to ratification of the Jamaica
Accords. Their main principle back then was to change the rules of the International
Monetary Fund (IMF) functioning in the way that allowed to create floating
currencies. Eventually, an Special Drawing Rights (SDR) basket was established in
an attempt to create a “polycentric” currency and “a rather cheap line of credit” for
developing countries [McKinnon 2009:7]. However, the accords still privileged
position of USD. They also allowed countries to cover their BoP deficit with a
national currency (issuing the short-term debt) and manipulate USD interest rate
[Narkevich, Trunin 2012].
Moreover, several regional blocks and international funds and organizations tend
to use other national currencies for the aims of international accounts. For example,
the Asia-Pacific region introduced the Asian Monetary Unit (AMU) basket on the
initiative of the Japanese government4. It is composed of 13 currencies: Japanese yen,
Chinese yuan, South Korean won, and ten currencies of ASEAN. This original set of
currencies was later widened by Indian, Australian, and New Zealand’s currencies
(the so-called “AMU-wide”) to make the new basket more convenient for the major
actors of the region. The Asian Development Bank now uses this basket.
Today’s definition and functions of “reserve currency” varies from one source
to another, and none of them provides the actual amounts of “significant quantities”,
mentioned in Carbaugh’s et al. version: A reserve currency (or an anchor currency)
is “a currency that is held in significant quantities by many governments and
institutions as part of their foreign exchange reserves” [Carbaugh, David 2009]. It
can be used in international transactions, international investments, and all aspects
of the global economy.
Besides, achieving the status of the reserve currency requires fulfilling a list of
intrinsic characteristics. The most obvious of them is currency’s stability, to minimize
losses in case of currency fluctuations. This factor is also connected with the size of
the issuing country’s economy and its share in international trade. According to
Greenspan (2001), what matters is also its financial institutions’ level of development:
the ability to invest borrowings into financial instruments with appropriate returns
3 International Monetary Fund. (1976). Annual Report. Special Drawing Right (SDR). Retrieved
February 08, 2021, from https://www.imf.org/en/About/Factsheets/Sheets/2016/08/01/14/51/
Special-Drawing-Right-SDR#:~:text=The%20value%20of%20the%20SDR,and%20the%20British%
20pound%20sterling.
4 AMU-wide. Research Institute of Economy, Trade and Industry. Retrieved February 17, 2021,
from https://www.rieti.go.jp/users/amu/en/wide.html.

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attracts more and more foreign investors. Due to the sluggishness of business
practices the historical factor and network externalities (the dependency of the utility
on the number of users) also play a role in the use of reserve currency.
While economists were debating on a single reserve currency dominating the
global economy and network externalities, in 2016 Chinese RMB became yet
another world reserve currency (10,92% of the IMF’s special drawing rights
currency basket) and Bundesbank’s (Germany central bank) decision to add
Chinese Yuan into its currency reserves5.
Currently, there are eight international currencies in the IMF: US dollar, euro,
Dutch guilder, Pound sterling, Japanese yen, Swiss franc, Canadian dollar and
Renminbi. Only five of them (excluding Swiss franc, Dutch guilder, and Canadian
dollar) with different weights are represented in the SDR basket. According to the
IMF’s Annual report (2019)6, the SDR basket is an international reserve asset that
can be exchanged for freely usable currencies, used for taking loans from the IMF.
Though there is no such official status as a dominating currency, USD and partly
Euro can still be called dominating currencies, because together they built up to
81%7 of world reserve currencies in the third quarter of 2020.
Initially, reserve currencies were created mainly for making international
calculations on commodity markets and minimizing transactional costs of foreign
trade operations, while nowadays, especially in Asia, they are frequently used as an
instrument of accumulating gold reserves for the cases of financial crises and raising
the national production’s competitiveness via national currency depreciation.
Modern global financial system’s characteristics, influencing the status of
RMB, include the following trends:
1) Deregulation of financial markets and internationalization of RMB,
meaning that there are more and more opportunities for FDI and large investors
worldwide can choose a country to work in;
2) Increased number of cross-border mergers and acquisitions;
3) The growth of multinational corporations in developing countries;
4) Rebalancing import and export operations, including moving from the Asia-
for-the-World to the Asia-for-Asia model of growth.
Shaping RMB as the IMF’s new reserve currency
The Internationalization of the Renminbi
The story begins in the 2000s and accelerates in 2009, after the global
financial crisis, with the establishment of the dim sum (issued outside mainland,
5 Black J., Engle S., Curran E. (15.01.2018). Bundesbank Says It’ll Add China’s Yuan to the currency
Reserves. Bloomberg News. Retrieved January 17, 2021, from https://www.bloomberg.com/news/
articles/2018-01-15/bundesbank-to-include-yuan-in-currency-reserves-dombret-says.
6 International Monetary Fund. Press-releases. Retrieved January 17, 2021, from https://www.imf.org/
en/News/Articles/2016/09/30/AM16-PR16440-IMF-Launches-New-SDR-Basket-Including-Chinese-
Renminbi.
7 IMF Data, Currency Composition of Official Foreign Exchange Reserves (COFER). Retrieved
January 17, 2021, from http://data.imf.org/?sk=E6A5F467-C14B-4AA8-9F6D-5A09EC4E62A4

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THE RISE OF CHINA: FOREIGN POLICY AND DOMESTIC DEVELOPMENT 237
denominated in RMB) bond market, expanded Cross-Border Trade RMB
Settlement Pilot Project (later Cross-Border Inter-Bank Payment System, CIPS)
and its further communication with Society for Worldwide Interbank Financial
Telecommunication (SWIFT).
It’s worth mentioning that the dynamics of RMB’s international use are
dramatic. According to SWIFT reports (2013–2015), RMB moved from being the
8th most traded currency in the world in 2013 to being 5th in 2014 and the 2nd most
used currency for trade and services in 2015. While using the currency outside
China was not allowed before 2004, the use of RMB outside China for all current
account operations (including commercial trade, dividend payment, payment of
services, etc.) and certain approved capital account transactions (ex.: FDI, ODI)
was permitted by the government and PBC only in 2008 and followed by
establishing bilateral local currency swap arrangements with 19 countries in 2013
[Hyoung-kyu 2013]. It’s hard to ignore such a huge progress towards openness,
which is significant both for capital allocation in the domestic economy and for the
evolution of China’s financial relations with the rest of the world [Aglietta 2011].
However, the low liquidity due to government control and underdevelopment
of Chinese financial markets are primary obstacles to RMB’s internationalization.
RMB’s current status
The fact that the IMF executive board decided to include RMB in the SDR
basket in 20168, has the air of Chinese symbolic achievement in three directions9.
First of all, there haven’t been any changes in the basket since 2000, when the euro
was adopted instead of the French franc and the German mark. Secondly, it was not
the first Chinese attempt to “enter the club”: in 2010 RMB was rejected due to the
lack of free convertibility. The managing director of the IMF, Christine Lagarde,
commented on this event as follows: “The Renminbi’s inclusion reflects the
progress made in reforming China’s monetary, foreign exchange, and financial
systems, and acknowledges the advances made in liberalizing and improving the
infrastructure of its financial markets”10. Third, RMB’s weight among SDR
currencies (10,92%) left Japanese yen (8,33%) and British pounds (8,09%) behind.
According to COFER, in the 4th quarter of 2016 (right after the inclusion) RMB’s
claims amounted up to 84.51 billion. They doubled in less than two years (2nd quarter
of 2018) and kept growing steadily since then, summing up to 244.52 billion of the
US dollars in the 3rd quarter of 2020. The rates of increase of RMB share in official
foreign exchange reserves have been the highest of all major reserve currencies
(USD, EUR, JPY) from the 3rd quarter of 2017 to the 2nd quarter of 2018 and returned
to the 1st place in the 1st quarter of 2020 (Figure 1), but the numbers are explained
purely by the ‘low base’ effect. Since 2017, the USD has increased by 1500, EUR –
8 IMF Press-release. Retrieved February 08, 2021, from https://www.imf.org/en/News/Articles/
2016/09/30/AM16-PR16440-IMF-Launches-New-SDR-Basket-Including-Chinese-Renminbi.
9 Ibid.
10 IMF Press-release. Retrieved February 08, 2021, from https://www.imf.org/en/News/Articles/
2015/09/14/01/49/pr15540.

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by 712, and JPY by 329 thousands USD in absolute terms, which is larger than the
overall RMB’s claims. But while RMB’s presence in foreign exchange reserves and
turnover is visible, there are still such functions as cross-border bank claims, external
public debt, international securities outstanding and imports invoicing, where RMB
is not used and USD takes a leading role.
Fig. 1. The rates of increase in claims of the SDR basket in 2018–2019 (billion USD)
Source: Calculated by the author based on the IMF Data, Currency Composition
of Official Foreign Exchange Reserves (COFER). Retrieved February 08, 2021, from
http://data.imf.org/?sk=E6A5F467C14B4AA89F6D5A09EC4E62A4.
However, from the point of the overall amount of IMF’s reserve currencies, the
share of RMB in world-allocated reserves and official foreign exchange reserves is
insignificant even after the inclusion unto the SDR basket.
Theoretically, the gains for different countries anticipated from using RMB as
a reserve currency include lower transactional costs, because no secondary
currency conversion (from USD to the relevant currency) will be needed once RMB
becomes free convertible, international seigniorage (the revenue or profit derived
from creating currency on the international level), wider space for fiscal and
monetary policies (though in case of China with its governmental interventions this
will not have much of an effect), the transfer of exchange risk from the domestic
firms to their foreign counterparts, the growth of domestic consumer’s purchasing
power owing to renminbi broader acceptability and the general expansion of
Chinese economic and political influence.
Factors influencing RMB’s international status
Economic factors affecting currency’s status in the academic research are
grouped into two broad categories: confidence and convenience (subcategorized
into liquidity and transactional network). The confidence in the stability of RMB is
affected by the Chinese government’s monetary and fiscal policies, which can be
quite harsh. For example, the latest RMB’s severe depreciation took place in 2019,
2015, 2008, and every time the reasons differed from the previous one11. Such a
situation incurs both solvency and liquidity risks on the currency, which is
challenging for international users and harm RMB’s international status.
11 China – RMB depreciation: this time is different. (08.09.2019). FXStreet. Retrieved January 17,
2021, from https://www.fxstreet.com/analysis/china-rmb-depreciation-this-time-is-different-201908090838.

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THE RISE OF CHINA: FOREIGN POLICY AND DOMESTIC DEVELOPMENT 239
Though there is a cluster of financial institutions, such as QFII/RQFII, SAFE,
PBoC, CIC, ABII, ABD, SFI, INE (Shanghai International Energy Exchange),
HSBC (Hong Kong Bank), SRB (Silk Road bank), etc. – the path for their
development is not clear enough, especially for the foreigners, who raise questions
about the well-developed financial market in China. They can also affect the
currency’s liquidity and work negatively for the status of the currency.
China’s share in the world trade (a convenience factor) is growing with the
expansion of BRIand diverse integration frames support this process (e.g., Asian
Infrastructure Investment Bank, Shanghai Cooperation Organization, Silk Road
Fund). Though the estimated level of China’s integration in the world trade is not
very high12 due to some aspects of the BRI member’s economic development, it is
a factor that boosts the use of RMB as a regional means of payment. As BRI is a
long-term project of “China-centered economic integration” [Kuteleva,Vasiliev
2020:1], the overall level of Chinese integration can hardly be measured at the
moment. Such ambitious SRF’s and CIC’s actions as taking part in Saudi Aramco
IPO (2019)13 and the launch of Chinese oil futures contracts in Shanghai INE
(2018)14 tell that there is enormous potential in the Belt and Road and a wish to
spread internationally.
The most important external factor is the domination of USD, which has been
the world’s major reserve currency for over 60 years. Neither the rise of Germany’s
and Japan’s economic power nor the establishment of the European monetary union
made USD leave its position. However, according to the US Department of the
Treasury, USD will continue to be the major reserve currency “as long as the United
States maintain sound macroeconomic policies and deep, liquid and open financial
markets”15. Lately, the sound macroeconomic policies of the U.S. have been
questioned all over the world16, even by such significant actors as JPMorgan: “As
economic dominance shifts east, there is less incentive to trade in the USD. Trump’s
aggressive stance on trade is accelerating this process”17. Though USD losing
12 The king of reserves: how Moody’s assessed the chance of the dollar losing dominance // RBC.
Retrieved February 08, 2021, from https://www.rbc.ru/economics/13/09/2018/5b993a759a79473
ac78ec4f9.
13 China Considers Up to $10 Billion Stake in Saudi State Oil Giant’s IPO. (06.11.2019). Bloomberg
News. Retrieved January 17, 2021, from: https://www.bloomberg.com/news/articles/2019-11-06/
china-said-to-discuss-at-least-5-billion-aramco-ipo-investment.
14 China’s petroyuan is going global, and gunning for the USD. (04.12.2018). SCMP News.
Retrieved February 08, 2021, from https://www.scmp.com/comment/article/2176256/chinas-
petroyuan-going-global-and-gunning-us-dollar.
15 Appendix 1: A Historical Perspective on the Reserve Currency Status of the U.S. dollar.
Retrieved February 08, 2021, from https://www.treasury.gov/resource-center/international/exchange-
rate-policies/Documents/Appendix%201%20Final%20October%2015%202009.pdf.
16 Peskov spoke about the shaking of confidence in the US dollar // RBC. Retrieved February 08,
2021, from https://www.rbc.ru/rbcfreenews/5b9ea5dc9a7947659b664cd0.
17 JP Morgan Admits Dollar’s Doomed Reserve Status to Unwittingly Cheer Bitcoin. (25.07.2019).
CNN News. Retrieved December 01, 2020, from https://www.ccn.com/jp-morgan-admits-dollars-
doomed-reserve-status-to-inadvertently-cheer-bitcoin/.

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reserve status is becoming an “ever-growing mainstream finance meme”18, the
bifurcation point is coming closer and the US-China Trade War is the first call.
In this regard it’s worth mentioning that HSBC does not believe the RMB will
come under pressure, having the Fed raising its rates, although the Fed’s eventual
tightening would engineer greater volatility for USD-RMB. First, due to capital
account restrictions, China never received much capital inflow that could reverse.
Second, China does not need capital inflows to fund a domestic savings gap – the
economy has excess savings19. It is also stated in the 2014’s report that the RMB
story is evolving rapidly and “we expect full convertibility to happen over the next
couple of years”, which makes it clear that HSBC’s expectations do not always
come in line with the reality.
There are also international political factors at play, such as creating inducements
for encouraging foreign users through a provision of military and diplomatic support
and soft power, which were widely used by the USA in the 20th century. China seems
to implement soft power through economic cooperation so far.
RMB’s perspectives for being a reserve currency in future
In a Five-Year Plan for 2011–2015, the Chinese government established to
develop Shanghai into a leading international financial center by 2020 and to
achieve capital-account convertibility by that year as well [Hyoung-kyu 2013].
Nevertheless, RMB is still being closely watched by the Chinese government, and
most probably financial liberalization is not going to happen in the nearest future20.
The 2 types of exchange rates (onshore yuan (CNY) and offshore yuan (CNH)) is
making it even more complicated for broadening RMB’s international usage, but
meanwhile, it does not prevent the ECB researchers from seeing the international
monetary system “as a tripolar currency system, with the renminbi making up one
pole alongside the dollar and the euro”21.
Given that Hong Kong and Singapore are the offshore zones trading in RMB, it
can already be called the regional reserve currency. Furthermore, if AIIB introduces
the Asian Drawing Right (ADR), equaling to 2 USD and driven by both blockchain
technology and regional central banks reserves (existing gold reserves + current non-
USD FX reserves + GDP size and trade volumes) in 2020, this will lead to “de-
dollarizing” the regional trade. While RMB is heavily prominent in the mix, the USD
18 JP Morgan Admits Dollar’s Doomed Reserve Status to Unwittingly Cheer Bitcoin. (25.07.2019).
CNN News. Retrieved December 01, 2020, from https://www.ccn.com/jp-morgan-admits-dollars-
doomed-reserve-status-to-inadvertently-cheer-bitcoin/.
19 Asian FX focus: RMB Q&A: The Top 10 questions. HSBC Global Research. Retrieved February 08,
2021, from https://www.research.hsbc.com/midas/Res/RDV?p=pdf&key=qaq8Q1dIrV&n=424259.PDF.
20 The yuan hit an 11-year low this week. Here’s a look at how China controls its currency // CNBC.
Retrieved February 08, 2021, from https://www.cnbc.com/2019/08/28/china-economy-how-pboc-
controls-the-yuan-rmb-amid-trade-war.html.
21 Ibid.

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THE RISE OF CHINA: FOREIGN POLICY AND DOMESTIC DEVELOPMENT 241
is weighted at below 20%22. The currency’s stability will be guaranteed by hi-tech
blockchain, further deepening the liquidity and trust in ADR as a reliable asset.
Another goal in the previous Five-Year Plan was the diversification of the
Chinese FX reserve portfolio, which can be realized through growing purchases of
Asian government bonds and facilitate RMB’s internationalization. However, there
are some rivals such as Japan and India in the region, and they may not wish to
depend solely on the RMB if there is an alternative, which the dollar may continue
for the foreseeable future [Hyoung-kyu 2013].
Revoking QFII and RQFII investment quotas (in September 2019) will raise the
availability of China’s capital and debt markets. “Foreign investors will find it more
convenient to participate in the domestic financial market, and China’s bond market
and the stock market will be better accepted by the global market, according to the
SAFE”23. Along with the inclusion of RMB into the main international indexes
(MSCI, FTSE Russell, S&P Dow Jones, and Bloomberg Barclays index), such lifting
market restrictions and a gesture of financial liberalization surely broadens the
channel for overseas RMB use and make the Chinese market more attractive.
Conclusion
For the past decade, China has put a lot of effort into globalizing RMB. It started
by including RMB to SDR and now definitely aims at total “de-dollarization” of
the Asia-Pacific region, which is quite a logical and natural move for such an
economically ambitious power. Today, China’s success in this direction is hard to
ignore because China’s share in the world trade, the growing strength of its financial
institutions, as well as new China-led economic initiatives and movement towards
openness. The probability of the decline of USD as a major reserve currency, stated
by some significant actors (e.g., JP Morgan) is another contributing factor in the
expansion of RMB. Though it is hard to predict the future of RMB because of the
strict government control over its exchange rates, there is a general
internationalization trend that attracts foreign investors to China. The government
supports this trend by emphasizing China’s commitment to economic openness in
Five-Year plans and by revoking QFII quotas. The possible introduction of ADR
also increases RMB’s chances to go global. Such perspectives look attractive to
investors and states searching for alternatives to USD and presents RMB as a decent
diversification opportunity. To quote the president and CEO of China’s HSBC
Bank Liao Yijian, “the pace of foreign financial institutions and foreign investors
entering the Chinese market has never been more active”24.
22 Outrageous predictions 2020 – Engines of Disruption. (02.12.2019). Saxo bank. Retrieved
January 17, 2021, from https://www.home.saxo//media/documents/campaigns/outrageouspredic
tions/outrageouspredictions2020.pdf.
23 China lifts investment quota limit for QFII/RQFII amid financial opening-up. (09.11.2019).
Xinhuanet. Retrieved January 17, 2021, from http://www.xinhuanet.com/english/2019-09/11/
c_138382088.htm.
24 Ibid.

Чернилевская К.Е. Вестник РУДН. Серия: Политология. 2021. Т. 23. № 2. С. 233–242
242 ВОЗВЫШЕНИЕ КИТАЯ: ВНЕШНЯЯ ПОЛИТИКА И ВНУТРЕННЕЕ РАЗВИТИЕ
Since the 1990s, China has emerged as the world’s manufacturing giant and
China’s “hyperactive and omnipresent” state has been actively stimulating “the
process by which the renminbi slowly evolves towards fully convertible status”
[Jacques 2009]. As China continues its economic and political rejuvenation,
Chinese leaders understand that the internationalization of RMB is their most
critical source of power moving forward and push RMB as the currency of choice
for its partners in the Asia-Pacific region and BRI members. Overall, the ongoing
process of RMB internationalization raises fundamental questions not only about
the evolution of the international monetary system and the dominance of USD but,
more broadly, about fundamental shifts in the global balance of power.
Received / Поступила в редакцию: 02.01.2021
Accepted / Принята к публикации: 12.02.2021
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About the author:
Klavdiya E. Chernilevskaya – MA Student, Faculty of World Economy and International Affairs,
Higher School of Economics – National Research University (e-mail: kechernilevskaya@edu.hse.ru)
(ORCID: 0000-0002-7541-8888).
Сведения об авторе:
Чернилевская Клавдия Евгеньевна – студент магистратуры факультета мировой экономики
и мировой политики Национального исследовательского университета «Высшая школа
экономики» (e-mail: kechernilevskaya@edu.hse.ru) (ORCID: 0000-0002-7541-8888).