Posted by: Dexter Roberts on May 20, 2009
China’s ambition to make its currency more powerful globally was on display, once again, on Wednesday. This time an official in the China Banking Regulatory Commission said that his country’s goal is for the yuan to make up more than 3% of global foreign exchange reserves by 2020. That would make the Chinese currency the fourth most important tender in international reserves, displacing the Japanese yen, but still behind the U.S. dollar, euro and pound.
While admitting that China would first need to make its still-largely closed capital account more open, Zhang Guangping, vice head of the Shanghai branch of the CBRC, stated: “we have the conditions to reach such a proportion.” In particular, China’s ambition would be realizable given the explosive growth of Chinese trade as well as its overall economy, Zhang said at a press conference.
Zhang’s comments come on the last day of a high-profile visit by the Brazilian president to China where the two countries’ leaders have signed trade agreements on everything from oil to beef and chicken imports. The visit fueled reports that the two massive developing nations are seriously considering moving more of their billions of dollars in annual trade to one denominated in yuan and the Brazilian real, and away from the dollar. This year China has overtaken the U.S. as Brazil’s largest trading partner.