Half of China’s cross-border trade transactions could be settled in the Chinese yuan by 2015 – with lower transaction costs and exchange-rate risks – thanks to China’s gradual internationalisation of its currency, says HSBC.
“The People’s Bank of China has been trying to internationalise the yuan but has done it gradually,” said HSBC Thailand head of commercial banking Kanoksak Mokkamakkul. “Foreigners can now hold and start trading the yuan.”Trade volume settled in the yuan totalled US$3.49 billion in May 2010 alone, just a fraction of the country’s trade volume for the whole year.
China plans to expand yuansettled trade and push the yuan to become one of the world’s major currencies for trade and investment.In the first 11 months of 2010, China registered US$2.68 trillion in its crossborder trade, while it had US$2.21 trillion for the whole of 2009.”Half of the trade figure is colossal and it will be much higher in the future,” Kanoksak said. China recorded 10.3percent economic growth last year, while this year HSBC estimates the country will expand 8.1 per cent.
One of the great ironies revealed by the global recession that began in 2008 is that Communist Party–ruled China may be doing a better job managing capitalism’s crisis than the democratically elected U.S. government. Beijing’s stimulus spending was larger, infinitely more effective at overcoming the slowdown and directed at laying the infrastructural tracks for further economic expansion.
As Western democracies shuffle wheezily forward, China’s economy roars along at a steady clip, having lifted some half a billion people out of poverty over the past three decades and rapidly created the world’s largest middle class to provide an engine for long-term domestic consumer demand. Sure, there’s massive social inequality, but there always is in a capitalist system. (Income inequality rates in the U.S. are some of the worst in the industrialized world, and more Americans are falling into poverty than are being raised out of it. The number of Americans officially designated as living in poverty in 2009 — 43 million — was the highest in the 51 years that records have been kept.)
China is the extreme opposite US democratic model, of course. It can ride roughshod over the lives of its citizens (e.g., building a dam that requires the forced relocation of 1.5 million people who have no channels through which to protest). But China’s system is unlikely to give corporations the power to veto or shape government decisionmaking to suit their bottom lines at the expense of the needs of the system as a whole in the way that, to choose but one example, U.S. pharmaceutical companies are able to wield political influence to deny the government the right to negotiate drug prices for the public health system. Fukuyama seems to be warning that, in Darwinian terms, the Chinese system may be more adaptive than the land of the free.