One Belt, One Road could help lift yuan globally

China's One Belt, One Road development project is an ideal vehicle for helping the country's currency gain wider global acceptance, according to a report.

The report by Renmin University in China was released on Thursday at a forum in New York sponsored by the school's International Monetary Institute (IMI) - The Conference on RMB Internationalization: Opportunities and Challenges. The report was compiled by a research team led by Chen Yulu, president of Renmin and a former member of the monetary policy committee of the People's Bank of China (PBOC), the country's central bank.

"It's not just a Chinese matter but is now also a global matter," said Ben Shenglin, executive director of the IMI and director of the executive MBA program at Zhejiang University, about the country's currency, the renminbi ( RMB) or yuan.

The conference comes days after a report from global transactions provider Swift showed that the yuan had surpassed the Japanese yen as the world's fourth most-used currency, trailing only the US dollar, the euro and the British pound.

China has been aggressively promoting yuan usage in a bid to get the Chinese currency included in the International Monetary Fund's (IMF) Special Drawing Rights basket of currencies.

Shenglin said One Belt, One Road will help the yuan gain acceptance beyond Asia. "It will help China to open up new markets and extend Chinese investment in the world," he said

Chinese President Xi Jinping unveiled the One Belt, One Road initiative in 2013 to establish new routes linking Asia, Europe and Africa.

It has two parts - a new "Silk Road Economic Belt" linking China to Europe that cuts through mountainous regions in Central Asia; and the "Maritime Silk Road" that links China's port facilities with the African coast and then pushes up through the Suez Canal into the Mediterranean Sea.

The initiative calls for infrastructure projects that will boost trade, economic development and energy security in the region.

Last year China committed $40 billion to the project.

The average Chinese citizen will also benefit from the internationalization of the yuan, said Shenglin: "It will be much easier to gain access to cash and to shop when they travel abroad.

"It will also be easier to send their children money when they study overseas."

The RMB Internationalization Report said that China's increasing role in world trade has helped the yuan to become a more prominent global currency.

"We should seize the opportunity of One Belt and One Road to raise the proportion of RMB in trade pricing and settlement and increase the use of RMB in FDI (foreign direct investment), trade financing and loan and bond issuance which are closely related to (the) real economy," the report said.

Shenglin said as global use of the yuan or RMB rises, so too will the pressure to open up more of China's domestic market. "It's similar to what happened when China joined the World Trade Organization. The government will have less control over the economy," he said.

The conference was co-sponsored by Renmin's North America Alumni Association, the Center for Global Business Studies at Pennsylvania State University in State College, Pennsylvania, and the Official Monetary and Financial Institutions Forum.

paulwelitzkin@chinadailkyusa.com