Chen Yulu - Chinese Currency and the Global Economy: The Rise of the Renminbi

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Since September 2008 a global financial crisis stemming from the American subprime crisis has evolved, spreading from the financial sector to the industrial sector and from the United States to Europe and the rest of the world. The global financial crisis will not only affect the long-term global economy and world finance but also prompt academics and practitioners to analyze the cause and reassess the situation in search of a new mechanism that facilitates sustainable economic development.

The crisis demonstrated that it would be useless to simply patch up the old economic model. A brand-new, sustainable economic mechanism is needed to rescue the world economy before it is too late. It should be universally accessible and benefit world stability. As a future global management model, the new mechanism requires participation and support from growing, developing countries. As a matter of fact, developing economies contributed almost the entire world economic growth in 2009.

As a remarkable developing country, China achieved economic output that accounted for 7.9 percent of total world output and foreign trade volume that amounted to 8 percent of total world volume in 2009. Chinas foreign exchange reserve has accounted for 28 percent of global foreign exchange reserves. The amount of foreign investment in China has always ranked among the top three in the past decade, and it even ranked number one in some years. With the deepening of its reform and opening up and the acceleration of its modernization, China has closely connected with the world economy, and Chinas economic growth has been an important engine in global economic stability and recovery.

It should be mentioned that China is now facing the in-depth blend of globalization and modernization, which objectively requires China to establish a new development pattern that can benefit itself and the world in the extremely complicated international financial environment. On one hand, China has its own unique characteristics, which means Chinas future development must be carried out according to its national conditions and China will adopt sustainable development with Chinese characteristics. On the other hand, the global issues related to finance are arousing more international concerns. Faced with an increasingly complicated financial environment, China should take a more active and open stance to establish a new worldwide thinking pattern for future economic and financial development.

The so-called global thinking pattern refers to one that is based on mutual interests and development and promotes cross-cultural communication. Since innovative thinking usually takes place with the interaction of different cultures, dynamic balanced management and global creative thinking will help China take a more active role in the rebalancing of the world economy as well as promote the establishment of a global management system based on long-term mutual trust and cooperation.

The harmony of heaven, earth, and human beings is the main trend and strength of traditional Chinese thinking. Hence, in the processes of economic globalization and modernization, effective coordination of the traditional Chinese Doctrine of the Mean, characteristic of integration, intuitive sensibility, reconciliation, and inherent harmony, with Western thinking, which focuses on individuality, independence, deductive reasoning, and the transcendence of external conflicts, will become the core of Chinas future global thinking pattern. In accordance with these thoughts, Chinas future economic growth will obtain continuous power from coordination with the global economy. The cooperation of the Chinese currency with the global financial system will lay the foundation for future growth.

It is expected that with a solid economy, stable social structure, and rich culture, Chinas economic and monetary growth will not only be a reality but also contribute to world economic prosperity and the establishment of a global cooperation model. In view of the above, this book describes Chinas monetary development against the background of current Chinese conditions and from the global viewpoint to comprehensively and systematically demonstrate the historical background, actual condition, core issues, and ultimate goal of Chinas monetary development.

This book includes six chapters. expounds on the historical background and implementation of RMB internationalization and points out that RMB internationalization is an important choice for China in order to participate in the reform of the international monetary system, allowing China to play an important role in global economic growth.