Business

China moves to internationalise yuan

BY PETE SANKEY
Senior Associate Editor
sankeyp@jamaicaobserver.com

Sunday, October 22, 2017

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BEIJING, China — China is taking steps to internationalise its currency — the yuan — and is hoping that this move will revalue the medium of exchange, according to the People's Bank of China (PBOC).

Pan Gongsheng, head of State Administration and Foreign Exchange and deputy governor of the central bank, said the exchange rate is more market-driven and has been more stable recently. He told the State-owned newspaper China Daily that the central bank was not having regular intervention in the foreign exchange market.

In a release last Tuesday ahead of the opening of the 19th National Congress of the Communist Party of China, the central bank said it is expecting usage of the yuan to rise so it can play a more important role as a global reserve currency. The release said the bank will continually facilitate the yuan's internationalisation to reflect a more stable position in the global monetary system.

Visitors here exchange US$1 for 6 yuan, but the Chinese currency, at the opening of the market last Wednesday, traded at 6.5991 yuan to US$1, weaker than the previous rate of 6.5883 to US$1. Businesses are not allowed to accept the US dollar for goods and services, and visitors to China must produce their passport when exchanging currency.

Analyst at the Bank of China, Wang Youxin, told China Daily that the Chinese currency has fully recovered from a fall in 2016 and has recouped from the losses.

“Supported by the country's improving economic data, the currency is expected to remain stable until the end of the year,” Wang told the newspaper. “Improved market expectations provide a favourable environment for pressing ahead with reform; the general trend is to move toward a more market-driven regime.”

The talk of a stronger Chinese currency comes amid plans by President Xi Jinping to push China's growing economy even harder in his second five-year term as head of the Communist Party.

“The period between now and 2020 will be decisive in finishing the building of a moderately prosperous society in all aspects,” Xi told the opening of the 19th National Congress of the Communist Party at the Great Hall of the People in Beijing.

“We must build on this achievement to embark on a new journey toward the second centenary goal of fully building a modern socialist country,” he said.

According to Xi, China's economy has been transitioning from a phase of rapid growth to a stage of high-quality development. “This is a pivotal stage for transforming our growth model, improving our economic structure and fostering new drivers of growth.”

Already home to some of the world's leading technology companies, China, President Xi said, should aim to reach frontier areas of science and technology, strengthen research, and make breakthroughs in original innovations.

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