China knows that, where trade and investment lead, a global currency follows
Andrew Sheng says China's enthusiasm for the new Silk Road fits into its plans for the renminbi
Students of renminbi internationalisation tend to forget that the globalisation of Chinese currency happened much earlier with copper coins, which were first standardised and minted in the Qin dynasty, about 2,200 years ago. My Chinese art historian teacher used to tell me that Chinese coins and ceramic shards were the first durable global debris, easily found around the rubble sites from Sri Lankan temples to Egyptian pyramids.
Money followed trade. Because China was short of silver and gold, common coins were minted mostly in copper. Silver in China was used as an official storage of value as early as AD1,000, but it was rarely minted as coins.
Having invented paper, China was also the first to experiment with fiat or printed money. The Song dynasty encouraged exports to finance their losing war against the Huns, which the succeeding Yuan dynasty also encouraged. Unfortunately, printing more paper money led to inflation.
Both dynasties encouraged trade with the West through two key channels, the land Silk Road across Central Asia to Egypt and Rome, and the maritime Silk Road via the Strait of Malacca and India. Chinese exports of silk, porcelain, crafts and spices were traded for gold, silver and copper coins, as Europe had little products at that time that China wanted.
This imbalance in trade, plus the need to defend against the Huns and Ottomans, forced Europe to industrialise.
It was the fall of Constantinople to the Ottoman Empire in 1453 that cut off the land trade. This blockage spurred the Spanish to go westwards to reach China, discovering America instead in 1492. Similarly, the Portuguese sailor Vasco da Gama raced to reach the East via the African Cape of Good Hope.