Voices & Votes: China's monetary policy; Economies pre and post financial crisis

2010-03-06 18:23 BJT

Special Report: 2010 NPC & CPPCC Sessions |

Guest speakers:

Arthur Krober, Managing Director of Dragonomics Research & Advisory

Professor Huang Yiping, Peking University

Pu Yonghao, Chief Invest. Strategist of UBS if Asia Pacific


Issues 1: Yuan goes international

China's currency, the yuan, is becoming a more popular choice for cross-border trade between China and its neighbors. In 2009, the Chinese government took actions to promote the yuan's international presence. But experts say that it will still take some time before it becomes a truly global currency.

The yuan's going global strategy accelerated dramatically in 2009. Since the end of 2008, The People's Bank of China has inked currency swap agreements with six countries and regions, worth 650 billion yuan.

In July of 2009, a pilot program was formulated that allowed the yuan to be used as the settlement currency of cross-border trade, without using the currency of a third country. The pilot areas include 5 cities on the Chinese mainland, the Hong Kong Special Administrative Region and ASEAN nations.

In September, the Ministry of Finance sold 6 billion yuan denominated bonds in Hong Kong. The sale was the first time the central government has issued yuan-denominated treasury bonds outside the mainland.

Analysts say the moves show a gradual approach by China to boost the international presence of the yuan.

However, cross-border trade in yuan is mainly limited to China's neighboring countries and regions. Its circulation in other Asian countries and the world is still limited.

The IMF said of the world's reserve currencies, the US dollar's share of known reserves is 61.6 percent, while euro's share is 27.7 percent. For the yuan going global still seems like a long ways away.