Other
François Godement, Ashley J. Tellis
{
"authors": [
"François Godement"
],
"type": "legacyinthemedia",
"centerAffiliationAll": "dc",
"centers": [
"Carnegie Endowment for International Peace"
],
"collections": [],
"englishNewsletterAll": "asia",
"nonEnglishNewsletterAll": "",
"primaryCenter": "Carnegie Endowment for International Peace",
"programAffiliation": "AP",
"programs": [
"Asia"
],
"projects": [],
"regions": [
"East Asia",
"China"
],
"topics": [
"Economy",
"Trade"
]
}
Source: Getty
In The Media
China, the Yuan and the IMF: Double or Quits?
In spite of a troubled summer for the Chinese currency, the International Monetary Fund decided in late November 2015 that the Chinese yuan would join the IMF’s reserve currency basket.
Published on Feb 12, 2016
Source: The European Council on Foreign Relations
China faces a stark choice: double down or back down on market reforms in order to achieve its long-held ambition of establishing the yuan as a fully international currency, according to a new report from ECFR.
“China, the yuan and the IMF: Double or quits?” is the latest edition of China Analysis, which examines Chinese-language sources to understand the Chinese view on current affairs. This edition focusses on Chinese reactions to the IMF decision to establish the yuan as a “freely usable currency” with the basket of currencies with Special Drawing Rights (SDR). This move from the IMF comes despite the Chinese yuan falling someway short of being a being a fully internationalised, “freely tradable” currency.
Since the much-discussed slowdown in Chinese growth which has taken place in the last few months, Beijing’s willingness to undertake the required market reforms to internationalise the yuan has seemingly waned. This reluctance is explored by Chinese authors who acknowledge that the Chinese government is unwilling to tolerate the free rising and falling of the yuan.Francois Godement, director of ECFR’s Asia and China programme, said:
“The IMF has made a starkly realist choice. Faced with the risk of becoming irrelevant in a world in which the country with the largest foreign currency reserves was also becoming the largest international public lender, the IMF made a political decision: it has taken into the SDR basket a currency that is “freely used” rather than freely tradable.
“It is clear that on monetary and financial reform, the Chinese authorities are faced with difficult choices that are familiar to poker players : with losses mounting, they could either double the stakes by speeding up reforms aimed at liberalisation, or they could withdraw from the game by going back on capital market moves and monetary internationalisation
“Only a year ago, the government’s problem was how to export capital. Now, the order of the day is keeping capital flows under some degree of control, while sticking for political reasons to the limited capital liberalisation moves adopted to gain the approval of the IMF.” ...
This article was originally published by the European Council on Foreign Relations.
Read full text
About the Author
François Godement
Former Nonresident Senior Fellow, Asia Program
Godement, an expert on Chinese and East Asian strategic and international affairs, was a nonresident senior fellow in the Asia Program at the Carnegie Endowment for International Peace.
- Reorienting China Policy By Working With Europe
- China at the Gates: A New Power Audit of EU-China RelationsIn The Media
François Godement, Abigaël Vasselier
Recent Work
More Work from Carnegie Russia Eurasia Center
- The Much-Touted Middle Corridor Transport Route Could Prove a Dead EndCommentary
For the Middle Corridor to fulfill its promises, one of these routes must become scalable. At present, neither is.
Friedrich Conradi
- What Does Nuclear Proliferation in East Asia Mean for Russia?Commentary
Troubled by the growing salience of nuclear debates in East Asia, Moscow has responded in its usual way: with condemnation and threats. But by exacerbating insecurity, Russia is forcing South Korea and Japan to consider radical security options.
James D.J. Brown
- Russia’s Coal Industry Is Running on Borrowed TimeCommentary
Powerful lobbyists and inertia led to Russia’s coal-mining sector missing an excellent opportunity to solve its structural problems.
Alexey Gusev
- What’s Having More Impact on Russian Oil Export Revenues: Ukrainian Strikes or Rising Prices?Commentary
Although Ukrainian strikes have led to a noticeable decline in the physical volume of Russian oil exports, the rise in prices has more than made up for it.
Sergey Vakulenko
- What the Russian Energy Sector Stands to Gain From War in the Middle EastCommentary
The future trajectory of the U.S.-Iran war remains uncertain, but its impact on global energy trade flows and ties will be far-reaching. Moscow is likely to become a key beneficiary of these changes; the crisis in the Gulf also strengthens Russia’s hand in its relationships with China and India, where advantages might prove more durable.
Sergey Vakulenko
