ADVANTAGES BY ENCOURAGING ENTRY OF RENMINBI INTO IMF SDRs

What is Renminbi?

• It is the official currency of people’s republic of china.

• literally means people’s currency.

Why China's currency has two names?

•  The yuan (元/圆) (sign: ¥) is the basic unit of the renminbi, but is also used to refer to the Chinese currency generally, especially in international contexts.

•  The distinction between the terms renminbi and yuan is similar to that between sterling and pound, which respectively refer to the British currency and its primary unit. One yuan is subdivided into 10 jiǎo (角), and a jiǎo in turn is subdivided into 10 fēn (分).

•  The renminbi is legal tender in mainland China, but not in Hong Kong or Macau. Renminbi is sometimes accepted in Hong Kong and Macau, and are easily exchanged in the two territories, with banks in Hong Kong allowing people to maintain accounts in RMB. The currency is issued by the People's Bank of China, the monetary authority of China.

INTERNATIONAL USE :

Before 2009, the Chinese renminbi had little to no exposure in the international markets because of strict government controls by the central Chinese government that prohibited almost all export of the currency, or use of it in international transactions. Transactions between Chinese companies and a foreign entity were generally denominated in US dollars. And then it is converted or settled in renmenbi to Chinese companies.

NOTE:

1. The Chinese Government has not taken full responsibilities and commitments on economic affairs at global levels.
2. Renminbi Yuan still has not become well-liquidated (fully convertible) yet.
3. The Chinese government still lacks deep and wide vision about how to perform fund-raising to handle international loans at global levels.

ADVANTAGES BY ENCOURAGING ENTRY OF RENMINBI INTO IMF SDR:

• As the currency becomes more international, the more open it will become to the world. At the same time, the less China will be able to manipulate it, which is to India's advantage .
•  strengthen multilateral institutions and use them to pressure China .
•  should try to make the Asian Infrastructure Bank as universal as possible - especially convincing the US to join - to counter China’s regional interests through the bank

• Against the background of the speculation, sparked by the recent crash in Chinese stock markets, that China’s ascendancy is at an end
  
  “The Chinese model based on manufacturing and exports is running out of steam and the Chinese leadership knows that. There is a shift to services.
  
  The Chinese transition, was one of a huge shifting of resources from manufacturing to services.
  
  
   “China has the resources, the political will, and a desire for wealth, power and stability deep rooted in its DNA to enable it to cushion this transition to the best of its abilities. If you take a long view of Chinese history, the exception has been a Chinese decline, the rule has been of a Chinese ascendancy in global markets”