How Beijing can emulate US, German investment returns
China is attempting to shift more of its foreign assets into instruments valued in its own currency to challenge the dollar's supremacy
One of the big themes for international banks and financial companies in the next 10 years will be a progressive "renminbi-isation" of internationally traded investments - whether in stocks, bonds or privately traded vehicles.
China is attempting to shift more of its foreign assets into investments held outside its giant, mainly US dollar-denominated foreign exchange reserves - and move to instruments valued in its own currency.
Renminbi or yuan trading and investment activity in Europe is a state-inspired attempt to raise the market share and challenge the dollar's supremacy.
One significant incentive for the Chinese authorities to speed renminbi-isation is China's lamentable track record in making returns from its large net foreign assets. There are signs that China takes this seriously.
China [has a] lamentable track record in making returns from its … foreign assets
A research paper from the Basel-based central bankers' bank, the Bank for International Settlements, came up with intriguing reasons why China and Germany, respectively the world's No2 and No3 creditor nations (Japan is No1), have recorded entirely different performances in their overall foreign investments over the past 15 years.