China adviser sees yuan supplant US dollar in 30 years
Chinese central bank advisers says liberalization of China’s capital account is inevitable
A Chinese central bank adviser sees the Renminbi superseding the US dollar as the global currency and predicts full liberalization of China’s capital account between 2015 and 2020, the China Securities Journal reported on Monday.
While the Chinese currency is already convertible under the current account - the broadest measure of trade in goods and services - the capital account, which covers portfolio investment and borrowing, it is still closely managed by Beijing because of worries about abrupt capital flows.
The newspaper said Chen Yulu, a member of the central bank’s monetary policy committee, wrote in a research paper recently that over the next 30-odd years to 2040, China should adopt a three-step strategy to achieve the internationalization of the Renminbi, also known as the yuan.
The first decade would push the rise of the yuan in neighbouring countries, the second decade would be the extended use of the Renminbi in Asia, and the third decade would see the full convertibility and internalization of the currency.
Chen also wrote in the report that the liberalization of China’s capital account was inevitable and that in the long term this liberalization would help financial stability.
Chinese officials have not given a timetable on a freely traded yuan, although the central bank has outlined the task of making the yuan “basically convertible” by 2015.
The article did not mention whether Chen’s view was based on China’s economy overtaking the US economy in size as well.