Page 70 - 2017 White Paper
P. 70
7 White Paper on the Business Environment in China
across Central Asia, the Middle East and Europe. The sea- also known as remninbi or 鈥渢he people鈥檚 money鈥� joined
based Maritime Silk Road goes through Guangdong and the basket of currencies comprising the IMF鈥檚 Special
Hainan en route to the Malacca Strait and Indian Ocean, Drawing Right or SDR, which includes the U.S. dollar,
traversing the Horn of Africa before entering the Red Sea the euro, the Japanese yen and the British pound. The
and Mediterranean. Both roads end up in Venice (Shi and event was hailed by Chinese media and the People鈥檚
Yang 2014). Bank of China, the country鈥檚 central bank, as a milestone
occasion of momentous significance, a powerful symbol
Guangdong in early November 2014 already hosted of its newly emerging economic muscle and a clear
the inaugural international expo for the maritime Silk signal of its serious intent to continue with ongoing
Road, with 42 countries participating (Shi and Yang economic reform.
2014).
According to Reuters, China鈥檚 central bank said in a
President Xi has also already ramped up efforts to statement: 鈥淭he inclusion into the SDR is a milestone
sell his new strategy overseas. One month after his in the internationalization of the renminbi, and is
Kazakhstan speech, when addressing the Indonesian an affirmation of the success of China鈥檚 economic
parliament in Jakarta, he pitched 鈥渢he 21st Century development and results of the reform and opening up
Maritime Silk Road鈥�. During state visits in 2014, he of the financial sector.鈥� The central bank added that the
secured verbal commitments from three countries along yuan鈥檚 SDR inclusion aligned with the country鈥檚 overall
the routes -- Tajikistan, the Maldives and Sri Lanka, while direction to 鈥渄eepen economic reforms鈥� and opening up
both India and Afghanistan have reportedly expressed to 鈥減romote global growth鈥� (Reuters 2016).
interest (Shi and Yang 2014).
Zhang Tao, deputy managing director for the IMF,
The president has not hesitated to back up the opined that the inclusion had significant impact not
plan with the appropriate funding 鈥� as of November only to China but to the rest of the world as well.
2014, media reports announced that China is planning Speaking at the Peterson Institute for International
a US$16.3 billion fund to finance construction of Economics and China Finance 40 Forum in Washington,
infrastructure linking its markets to three continents D.C., Xinhua reports, he said: 鈥淭he inclusion of the
along the New Silk Road route (Shi and Yang 2014). He Renminbi thus recognizes a significant increase in
also allocated US$50 billion in October to establish an the internationalization of the Chinese renminbi in
Asian Infrastructure Investment Bank to lend money to recent years, underpinned by policy reforms to achieve
build roads, railways and other transport links in poorer China鈥檚 transition to an increasingly open and market-
parts of Asia (The Economist 2014). based economy.鈥� Mr. Zhang echoed the central bank鈥檚
sentiments on the implications of the SDR inclusion
Experts expound on the New Silk Road plan鈥檚 on China鈥檚 reforms, adding that this development
significance, that this could mean 鈥渁 shift in China鈥檚 would 鈥渉elp consolidate the process of renminbi
strategic thought鈥�, says Zhang Yunling, director of the internationalization鈥� and 鈥渟trongly support China鈥檚
Institute of Asia-Pacific Studies at the Chinese Academy continued efforts to reform its monetary, foreign
of Social Sciences. To Bloomberg, Mr. Zhang added exchange, and financial systems鈥� (Xinhua 2016c).
that: 鈥淭he past three decades of China鈥檚 development
have been focused on 鈥榓bsorbing foreign investment鈥� Some skeptical observers of Beijing鈥檚 often inscrutable
and the next step will be about the outflow of Chinese foreign exchange economic policy, however, were not so
development to its neighbors鈥� (Shi and Yang 2014). easily convinced.
Yuan Inclusion in IMF鈥檚 SDR After the October 1st announcement, Fortune
reported U.S. Treasury Secretary Jack Lew as saying
Progress Report the yuan was 鈥渜uite a ways鈥� from true global reserve
currency status. He acknowledged the 鈥渆normous鈥�
change in China in the last 10 years in implementing
On October 1st, 2016, the same day that the policies to make the yuan more open, but added that
Communist Party celebrated anniversary of the founding Beijing 鈥渟till had work to do to make its currency and its
of the People鈥檚 Republic of China, its currency, the yuan, economy more market-driven鈥�. Secretary Lew said: 鈥淏eing
70
across Central Asia, the Middle East and Europe. The sea- also known as remninbi or 鈥渢he people鈥檚 money鈥� joined
based Maritime Silk Road goes through Guangdong and the basket of currencies comprising the IMF鈥檚 Special
Hainan en route to the Malacca Strait and Indian Ocean, Drawing Right or SDR, which includes the U.S. dollar,
traversing the Horn of Africa before entering the Red Sea the euro, the Japanese yen and the British pound. The
and Mediterranean. Both roads end up in Venice (Shi and event was hailed by Chinese media and the People鈥檚
Yang 2014). Bank of China, the country鈥檚 central bank, as a milestone
occasion of momentous significance, a powerful symbol
Guangdong in early November 2014 already hosted of its newly emerging economic muscle and a clear
the inaugural international expo for the maritime Silk signal of its serious intent to continue with ongoing
Road, with 42 countries participating (Shi and Yang economic reform.
2014).
According to Reuters, China鈥檚 central bank said in a
President Xi has also already ramped up efforts to statement: 鈥淭he inclusion into the SDR is a milestone
sell his new strategy overseas. One month after his in the internationalization of the renminbi, and is
Kazakhstan speech, when addressing the Indonesian an affirmation of the success of China鈥檚 economic
parliament in Jakarta, he pitched 鈥渢he 21st Century development and results of the reform and opening up
Maritime Silk Road鈥�. During state visits in 2014, he of the financial sector.鈥� The central bank added that the
secured verbal commitments from three countries along yuan鈥檚 SDR inclusion aligned with the country鈥檚 overall
the routes -- Tajikistan, the Maldives and Sri Lanka, while direction to 鈥渄eepen economic reforms鈥� and opening up
both India and Afghanistan have reportedly expressed to 鈥減romote global growth鈥� (Reuters 2016).
interest (Shi and Yang 2014).
Zhang Tao, deputy managing director for the IMF,
The president has not hesitated to back up the opined that the inclusion had significant impact not
plan with the appropriate funding 鈥� as of November only to China but to the rest of the world as well.
2014, media reports announced that China is planning Speaking at the Peterson Institute for International
a US$16.3 billion fund to finance construction of Economics and China Finance 40 Forum in Washington,
infrastructure linking its markets to three continents D.C., Xinhua reports, he said: 鈥淭he inclusion of the
along the New Silk Road route (Shi and Yang 2014). He Renminbi thus recognizes a significant increase in
also allocated US$50 billion in October to establish an the internationalization of the Chinese renminbi in
Asian Infrastructure Investment Bank to lend money to recent years, underpinned by policy reforms to achieve
build roads, railways and other transport links in poorer China鈥檚 transition to an increasingly open and market-
parts of Asia (The Economist 2014). based economy.鈥� Mr. Zhang echoed the central bank鈥檚
sentiments on the implications of the SDR inclusion
Experts expound on the New Silk Road plan鈥檚 on China鈥檚 reforms, adding that this development
significance, that this could mean 鈥渁 shift in China鈥檚 would 鈥渉elp consolidate the process of renminbi
strategic thought鈥�, says Zhang Yunling, director of the internationalization鈥� and 鈥渟trongly support China鈥檚
Institute of Asia-Pacific Studies at the Chinese Academy continued efforts to reform its monetary, foreign
of Social Sciences. To Bloomberg, Mr. Zhang added exchange, and financial systems鈥� (Xinhua 2016c).
that: 鈥淭he past three decades of China鈥檚 development
have been focused on 鈥榓bsorbing foreign investment鈥� Some skeptical observers of Beijing鈥檚 often inscrutable
and the next step will be about the outflow of Chinese foreign exchange economic policy, however, were not so
development to its neighbors鈥� (Shi and Yang 2014). easily convinced.
Yuan Inclusion in IMF鈥檚 SDR After the October 1st announcement, Fortune
reported U.S. Treasury Secretary Jack Lew as saying
Progress Report the yuan was 鈥渜uite a ways鈥� from true global reserve
currency status. He acknowledged the 鈥渆normous鈥�
change in China in the last 10 years in implementing
On October 1st, 2016, the same day that the policies to make the yuan more open, but added that
Communist Party celebrated anniversary of the founding Beijing 鈥渟till had work to do to make its currency and its
of the People鈥檚 Republic of China, its currency, the yuan, economy more market-driven鈥�. Secretary Lew said: 鈥淏eing
70
