University of Macau. Faculty of Social Sciences and Humanities. Department of Government and Public. Administration

Transcription

1 University of Macau Faculty of Social Sciences and Humanities Department of Government and Public Administration World Financial Crisis and RMB Internationalization: A False or Real Historical Opportunity? Submitted by Wang Xiaowei M-B Supervisor: Dr. Wang Jianwei A Thesis Submitted in Partial Fulfillment of the Requirements For The Degree of Master of Arts in International Relations and Public Policy at the University of Macau July 10, 2012

2 Statement I, Wang Xiaowei, hereby state that this thesis is my own and original work, apart from the sections where origins are clearly stated. All the materials in this thesis have never been used (partially or wholly) in fulfilling the requirements for any degree or qualification in this or other universities prior to this submission. Student's signature: Wang Xiaowei Date: July 10 th 2012 I

3 Acknowledgments I am greatly indebted to my supervisor, Professor Wang Jianwei, for his valuable instructions and suggestions on my thesis as well as his careful reading of the manuscript I feel grateful to all the teachers in the Department of Government and Public Administration at University of Macau who once offered me valuable courses and advice during my study. My sincere thanks are also given to Professor Chen Dingding and Professor Song Weiqing from whose lectures I benefited greatly Last but not least, I would like to express my gratitude to my beloved parents and friends who have always been helping me out of difficulties and supporting without a word of complaint. II

4 List of Tables Table Page 1. Hypothesis Real GDP of US, EU, Japan, UK and China Current Account Balance of US, EU, Japan, UK and China Exports of Goods and Services of US, EU, Japan, UK and China Currency Composition of Official Foreign Exchange Reserves (COFER) 58 III

5 List of Diagrams Diagrams Page 1. Conditions of RMB Internationalization The Proportion of Chinese GDP to the World GDP 58 IV

6 Abstract In this thesis, I want to analyze the RMB Internationalization under the global financial crisis, as well as to predict its influence on international political and economic system according to different possible international monetary systems after the financial crisis. Global financial crisis called for serious considerations about international monetary system. For example, some people think that there are some uncertain factors in the financial market under the financial crisis, so they hold a conservative opinion of RMB internationalization. Others think that the U.S. Dollar and Euro will collapse in this crisis, and RMB could take this chance to replace U.S. Dollar to be the most powerful currency. This thesis would analyze RMB Internationalization under financial crisis background firstly-to test whether this financial crisis created a favorable condition for RMB or not. Then, we will make it clear why RMB Internationalization is a necessary step in China, by talking about its potential advantage and disadvantage factors. In addition, a model, listing essential conditions, will be set up in this paper, to test whether this process could be successful under the financial crisis. There are two cases in this paper. They are Hong Kong offshore market and RMB cross-border settlement. In the first case, through analyzing advantages and risks of Hong Kong, we find that Hong Kong is the best place to establish RMB offshore market. But considered several potential risks after financial crisis, this process could not be radical. In the second case, we find that RMB trade settlement business has started to run in several V

7 continents, but it still cannot replace the position of U.S. Dollar in the short-term. Furthermore, through analyzing possible prospect of several major international currencies (Yen, Euro and U.S. Dollar), we make a conclusion and predict the future of international monetary system. Keywords: RMB internationalization, offshore market, settlement, Dollar, Yen, Euro VI

8 Content Introduction... 1 Chapter 1 Literature Review...4 Chapter 2 Theoretical Framework and Research Methodology Theoretical Framework Hypotheses Research Methodology...18 Chapter 3 The History of Currency Internationalization What is Currency? What is Currency Internationalization The History of Currency Internationalization The U.S. Dollar Internationalization The Euro The Yen Internationalization...29 Chapter 4 Necessity and Feasibility of RMB Internationalization Background The Current Situation of RMB Internationalization The Necessity Analysis The Advantage to China The Disadvantage to China Why it should be Promoted after the Financial Crisis The Feasibility Analysis...43 VII

9 4.4.1 Domestic Condition The International Condition What's the Route?...50 Chapter 5 Case 1: RMB Offshore Market Why There Should be Offshore Markets Why Hong Kong is the Best Choice? What is the Related Policies? Is There Any Risks? The Barriers Suggestion What is the Next Stop? Why Singapore Could Only be the Second Stop? Could Taipei Become the Second one?...67 Chapter 6 Case 2: RMB Trade Settlement What is Trade Settlement What is the Current Situation RMB Trade Settlement in Asian RMB Trade Settlement in South America RMB Trade Settlement in Europe RMB Trade Settlement in Africa RMB Trade Settlement in Australia...81 Chapter 7 Conclusion...83 VIII

10 7.1 The Prospect of U.S Dollar The Prospect of Euro The Prospect of Yen The Prospect of RMB The Conclusion...92 Bibliography IX