中国正在处于对外开放和遵守国际规则的过程中，但是现在与美国的激烈竞争严重影响了中国的发展。在这场贸易对战中，想要不损害中国的贸易和投资伙伴，尤其是继续“一带一路”倡议，解决的方法应当是谨慎地扩大人民币区，而且要双管齐下，即中国政府采取有形主导手段，合作伙伴货币对人民币而非美元更为密切地跟随。

判断人民币新兴区的最佳指标是贸易伙伴货币和在岸人民币之间的强劲合作。如果全球斗争结束，在中国轨道上的国家可以从人民币主导的贸易与投资和更可预测的中国货币和汇率政策中引进稳定。那么，有哪些措施可以使贸易和投资伙伴进入中国的货币金融体系的轨道呢？

1、关于中国贸易和投资伙伴的需求

中国逐渐从出口导向型生产转向国内投资和消费，出口对国内生产总值的贡献正在缩小，在平衡不仅是从出口和投资导向型增长向消费导向型增长的转变，同时也降低了融资增长中的信贷要素。对于人民币区来说，这样的变动将增强人民币的稳定性，使区内价格具有更大的可预测性，减少美元波动带来的干扰。此外，中国可以提供以人民币计价的融资来帮助其65个“一带一路”合作伙伴，允许这些国家发行熊猫债券，从而在未来产生可预测的债务，拜托他们对美元贸易和投资的依赖。

2、中国近期货币汇率政策

中国货币汇率政策主要有三个阶段，从人民币/美元挂钩向基于供需的浮动汇率制度转变，并参考未披露的篮子；到2015年宣布中央平价设置机制，再到2017年加入逆周期调节因子。但自从贸易战不断升级依赖，人民币贬值压力加剧。而且，虽然中国目前还没有被指责为汇率操纵国，但是在目前的情况下，中国不能够朝着更广泛的浮动前进。

3、货币和汇率制度

中国在货币政策、货币总量以及2-3%之间的通货膨胀目标制上追求多种目标，但是在一定程度上都服从于美元的汇率目标，这在贸易紧张时期变得更加突出。在汇率方面，人民币汇率与美元一直保持紧密的联系，逆周期调节因子阻止人民币/美元汇率对稳定汇率的更大偏离，更是给市场提供与美元更紧密联系的信号。这其实是对建立人民币区域的一个阻碍。

而在担忧人民币浮动的因素方面，中国的人民币与其他欧洲、中东和非洲货币也有所不同。除了汇率预期作用大致相似以外，担忧外币债务对外汇储备压力这一因素对中国基本不生效，中国的外汇储备是非常充足的。而对于经济主体缺乏广泛的外汇风险对冲，依赖于当局对汇率的平滑的体制导致的汇率浮动幅度的变大可能导致经济损失和信任损失。

4、强化人民币作用

尽管许多分析人士将人民币国际化热情的缺乏归咎于汇率预期和资本自由化的缺乏，以及贸易紧张，但中国当局仍有空间展现其政策。让人民币区建立的关键在于中国要采取可靠的货币和汇率政策。同时，应当重新实施人民币国际化初期采取的措施，当局应当采取双管齐下的做法，同时使用以经常账户为重点的措施和以金融账户为重点的措施。

“一带一路倡议”（BRI）为人民币国际化提供了千载难逢的机遇。项目应以人民币计算和开具发票。此外，从中国大陆以及中国境内银行的境外分支机构和子公司提供的银行贷款应为人民币。与金砖国家、上合组织国家、东盟、中东欧国家、非洲和阿拉伯银行同业协会缔结的银行同业协会也已经规定了促进人民币贷款的目标。

总结来说，目前的贸易紧张局势可能会继续下去，这样在一定程度上缩小了货币和汇率政策的范围，但中国当局仍有自己的手段去推动人民币国际化。随着中国以更开放的态度融入世界经济，中国经济金融体系的稳定性也将能够影响其伙伴国。

作者 | Herbert Poenisch   IMI国际委员、BIS原高级经济学家、浙大AIF学术委员

Boosting internationalisation of RMB 

in times of trade tensions

Herbert Poenisch

The current tug of trade war between the US and China has emboldened the sceptics of economic theories. No longer can free prices and exchange rates be trusted to balance the global economy. Over the past 20 years China has started to trust the functioning of economic levers and gradually allowed them to function. The expected results started to appear, such as a reduced current account surplus.

Now this trust in the functioning of economic levers has been damaged, arguably beyond repair. It has been damaged by the champion of free markets itself, the United States. Before that they led the global proliferation of free market theories,  notably after the collapse of the Soviet Union and other Socialist countries. These countries were reluctant to allow these free market mechanisms to function, fearing ofbeing put at a disadvantage compared with established players. The US and the organisations dominated by them, such as the IMF and the IBRD went out to spread the gospel and to force countries to allow the invisible hand to work. The results were mixed.

China was far more reluctant to embrace the functioning of economic levers. They rightfully chose a more prudent path to globalisation than those following the US advice. The benefit reaped by China was a gradual transition to a market based economy, avoiding the hardships experienced by former Socialist countries. Weaker economies are well advised to some protective measures before opening up.

The US has now declared itself the victim of the mechanism of globalisation and fully embraced protectionism. The main target is China and any weapons are used, ranging from weakening the exchange rate to capital account measures such as keeping out certain FDI to micro management such as barring Huawei from the US market.

China has been caught in the middle of opening up and following international rules. The first and foremost among them are a freely floating exchange rate and opening up the financial account. China joined the SDR in 2016, promising to allow RMB to float more freely and liberalise the financial account. All this is put on a back burner, putting both, exchange rate regime and liberalisation of capital flows on the table as bargaining chips in the great tussle with the US.

How can this game continue without damaging China’s trading andinvestment partners, prominently those in the Belt and Road Initiative? The solution should be a carefully conducted expansion of the RMB zone. This will be the result ofa two pronged approach, the visible hand leading, meaning measures taken by Chinese authorities as well as the invisible hand following, by partner currencies moving more closely with the RMB rather than USD.

This article will cover China’s global commitments in trade and finance and the impact on major trading partners and Belt and Road countries. Can these countries be sheltered from these uncertainties by proving a sphere of stability in the form of a regional RMB zone? The best indicator of an emerging RMB zone is the stronger co-movement of trading partner currencies with the onshore RMB. If global stability is fought over, the countries in China’s orbit can import stability from RMB denominated trade and investment and a more predictable monetary and exchange rate policy in China.

This article will conclude which measures should be taken to bring trading and investment partners into the orbit of China’s monetary and financial system.

1.  Needs of China's trade and investment partners

In an interconnected world with value added chains stretching across a number of countries the US tariff measures will not only affect China but also countries in the supply chain, including the US itself. Canthe impact of these tariffs on Chinese exports and imports from emerging markets be cushioned by boosting the RMB zone? Will invoicing and payment in RMB prevent a pass through of the trade shock?

Reducing the dependence on the USD has not only been a political aim but also an economic necessity. Although global liquidity is still ample, USD liquidity might be unequally distributed. There is not only a shortage in most EME economies but increasingly also in China. The USD borrowing by Chinese entities, financing of essential imports as well as ambitious Belt and Road projects in USD might lead to a USD shortage in China if the trade tensions continue.

China has become the main trading partner of more than 50 countries all over the world, but mainly in Asia.It is supplying not only consumer goods but also high quality investment goods which form part of the Belt and Road strategy. In return China buys primary products and intermediary goods for its export production as well as domestic investment and consumption.

In the past few years China has shifted away from export led production to domestic investment and consumption. While this rebalancing is under way, exports continue to play an important role, however, witha shrinking contribution to the GDP.Rebalancing is not only a shift from export and investment led growth to consumption led growth while reducing the credit element in financing growth.

Assuming that domestic investment and consumption will absorb most of the imports, a strengthening of the RMB element will stabilise import prices for China as well as export prices for EME suppliers. The benefit of a RMB zone will be a greater predictabilityof prices within the zone and less disturbance from theUSD volatility.

In addition, China can help its 65 Belt and Road partners by providing finance denominated in RMB which will create a predictable debt in future. These countries can raise debt also by issuing Panda Bonds in the vast Chinese onshore RMB market. As a result these countries could wean themselves off the dependence on the USD for trade and investment.

However, the beginnings since 2009 were very modest and far off the critical mass of tying countries to the RMB. For nearly all indicators the end of 2015 or early 2016 saw the peak. The BIS forex survey of spring 2016 showed a RMB share of 2% (4% for currency pairs).Since then most of them stalled, someof them even declined.

The share of China’s trade denominated and settled in RMB declined from 26% in 2015 to 15% in 2018. Payments in RMB reported by SWIFT, CIEC and RMB Globalisation indices such as by Standard Chartered Bank and IMI were flat since end 2015, even declining during some periods. The first quarter of 2019 saw such a decline.

On the financial account, FDI settled in RMB, both inward and outward mostly declined since end 2015. Only the RMB share of ODI increased in 2018, due to a decline in ODI in advanced economies. The share of cross-border bank lending in RMB by banks in China remained at 10%while the share of forex lending by Chinese banks globally accounted for the major part of the business. Cross border deposits remained unchanged at 30% mainly due to Hong Kong RMB deposits. The only component which showed an upward trend was the purchase of RMB denominated securities, equities as well as bonds by foreigners, private as well as official. While the share of official forex reserves increased steadily, the private RMB ones were volatile. The share of official reserves was close to 2% at the end of 2018.

While the purchase and holding of RMB denominated securities increased, their share in total stock market capitalisation and of total domestic bonds issued remained below 2%. The only exception is Chinese central government bonds, where the share of foreign holdings is 8%. The main reason is the lack of trust in financial information issued by financials, corporates and sub-national governments.

The share of lending in RMB to Belt andRoad countries for Chinese projects has been incredibly low and the issue of Panda bonds by Belt and Road countries has been negligible. The increase in RMB deposits with Chinese banks, the decline in RMB denominated lending at the end of 2018 presents a repatriation of RMB, a capital inflow. This was reinforced by the overseas issue of RMB securities by the PBoC to mop up CNH liquidity.

Despite widespread declarations to boost the internationalisation of the RMB by the visible hand, theChinese authorities, the results have been rather modest. Since the financial instability of 2015, alreadybefore the trade tensions broke out, most indicators have been underperforming. All these indicators are the nexus where the visible hand hold hands with the invisible hand. Have the administrative measures and monetary and exchange rate policies failed to generategreater confidence among market participants to invest and trade in RMB, thus not consolidating the foundations of an RMB zone?

2.  China's recent monetary and exchange rate policy

China has made great strides since moving away from a fixed RMB/USD exchange rate in 2005 to an independent monetary policy and more flexible exchange rate policy.The RMB exchange rateversus the USD and other major currencies moved in both directions in recent years. EME currencies shadowing the RMBwould provide stability and formthe essential core of a RMB zone.

The main phases werefrom 2005 to 2015, from 2015 until 2017, and since then.

The first phase was characterised by a shift from a RMB/USD peg to a floating rate regime based on supply and demand with reference to an undisclosed basket. There were few currencies in the basket at the beginning, widened to 13 currencies in 2015 and 24 currencies in 2017. The central parity would be announced at the beginning of the trading day and the limits for deviations for the RMB/USD rate as well as for the other core currencies, ie the EUR, the JPY and the HKD were specified and widened during this period. The USD rate still played a key role with a narrower tradingband. During the global financial crisis from 2008 to 2010 the RMB/USD rate was stabilised, a return to the previous regime.

This regime survived a massive appreciation linked with capital inflows until mid 2014 as well as outflows followed by a depreciation of the RMB until mid 2015. Then the PBoC announced a new central parity setting mechanism. The closing rate of one day would be the opening rate for the next day, thus strengthening the market determination of the central rate. This unexpected change was followed by further capital outflows in the second half of 2015 and 2016 as a result of unwinding of carry trade and capital flight, with the RMB depreciating to the CFETS basket by 10% between mid 2015 and end 2016.

Once the CFETS basket was published and the new central parity system allowed to work the RMB stabilised in relation to the basket. The forex marketunderstood the exchange rate policy and acted accordingly and EME currencies moved more closely with the RMB. In May 2017 the parity settingmechanism was disturbed by a counter-cyclical adjustment factor (CCAF), driving a wedge between the closing rate and the new opening rate. The purpose was to lean against depreciation expectations and herding behaviour and to stabilise the RMB/USD rate. The market interpreted this adjustment as reverting backto a RMB/USD target.

In relation to partner EME currencies, the period of pegging to a basket could be called the golden period as co-movements between the RMB and EME currencies became closer and more significant. This was the beginning of a RMB zone accepted by market participants, the invisible hand. McCauley and Chang have shown that the link between RMB and EME currencies strengthens as a result of multilateral and predictable policies. Once the CCAF was introduced this link weakened.

The CCAF was re-enacted in 2018 when the depreciation pressure on the RMB intensified as a result of the escalating trade war with the US. The RMB declined, both in terms of USD as well as the CFETS basket until this very day. Now that the RMB/USD rate has been thrown into the negotiating basket the exchange regime is ever so uncertain for EME currencies.

The RMB/USD exchange rate has become the focus of the US attention, as they feel that China might weaken the RMB to counter the effect of tariffs. So far China has not been accused as currency manipulator but China cannot take major steps towards wider floating under present circumstances. These might be interpreted as trade related measures provoking a tough response from the US. Thus an independent monetary and exchange rate policy is off for the time being.

3.  Declared monetary and exchange rate regime

The IMF classifies monetary and exchange rate regimes of countries according to the actual practices and published these categories in the annual report on exchange arrangements and exchange restrictions.All SDR countries are in the category of inflation targeting and floating exchange rates, where only Japan attaches greater importance to the bilateral JPY/USD exchange rate. China was moving towards this when the trade war broke out.

China pursues a variety of targets in its monetary policy, monetary aggregates as well as an inflation target between 2-3%. According to market understanding these are subordinate to an exchange rate target of shadowing the USD. This becomes even more prominent during times of trade tensions.

Regarding exchange rates, China was in the category of USD pegging countries until 2005 when it was moved into the category of stabilised arrangements similar to Singapore with a peg to an undisclosed basket, both in composition and weights. In 2017 it was moved again into a category of crawl-like arrangement with an anchor to a composite (basket). Since then, greater deviation from astable RMB/USD has been prevented by the adjustment factor CCAF giving the market a clear signal of a closer link with USD. This also served to calm US concerns of a deprecation of the RMB which might have caused a US accusation of currency manipulator.

However, this deviates from offering an alternate exchange rate regime for trade and investment partners. During the basket pegging period, EME currencies followed RMB more closely and diverged from the USD, creating a RMB zone.During the present negotiated exchange rate regime, both RMB and EME currencies revert to closely following the USD, a setback for establishing a RMB zone.

While the external pressure to tie the RMB to the USD has been the main explanatory variable there is also a fair amount of fear of floating in China. This fear is different from other EME currencies because of the following factors.

The exchange rate expectations are the same as other EME. They lead economic agents to pro-cyclical behaviour. In periods of expected appreciation, export funds are repatriated and capital inflows due to unwinding or carry trade but also speculative inflows reinforce this trend. Once the tide turns, the opposite effect happens, accelerating the depreciation. Big Chinesebanks and corporations ride the tide rather than take opposing positions. Their goal is to make profit, particularly out of exchange rate movements.

The element different from other EME is the fear of debt servicing in foreign currencies which might deplete forex reserves. First of all, China’s forex reserves are plentiful by any standards and the indebtednessin foreign currencies is lower than other EME. The foreign debt as percentage of GDP has been steady at 13% but the adequacy to cover short term foreign liabilities has declined from 370% in 2012 to 200% in 2017.  Thus a depreciation would not lead the country to the brink of financing ability.

Finally, due to the absence of widespread hedging of foreign exchange risks by economic agents and greater reliance on smoothing of the exchange rate by authorities, wider margins of floating might lead to losses in the economy and loss of trust. The threshold of 7 for the RMB/USD rate is a case in point. Other EME have shown once such apsychological benchmark is broken, the reaction of market participants might turn into an avalanche. The capital account restrictions in China might help somewhat but they are not watertight. China has also taken administrative measures, it reduced its outward direct investment and encouraged residents to repatriate funds, such as in 2017, with moderate success.

Once the special measures are terminated, the invisible hand gains the ‘upper hand’ making it difficult to lean against the wind. What is to be done to sustain the momentum created by the visible hand, in bilateral negotiations such as with Russia as well as international fora such as the various regional interbank associations created by China or the Belt and Road Forum? Will declarations create trust and be strong enough for the invisible hand to follow and deal substantially in RMB?

4.  Strengthening RMB's role

While many analysts blame the exchange rate expectations and lack of capital liberalisation in addition to the trade tensions for the lack of enthusiasm for RMB internationalisation, there is still room for the Chinese authorities to show the visible hand. The room to manoeuvre has been limited even more since the trade tensions arose.Capital account restrictions are here to stay in view of the weakness of China’s financial system and the exchange rate will weaken facing increased tariffs in major export markets.

The key to getting a RMB zone off the ground is for China to adopt a credible monetary and exchange policy. It has been shown that EME, first and foremost those of main trading and Belt and Road countries are more likely to follow the RMB when there is a credible alternative to following the USD. While a variety of monetary regimes have been adopted by EME monetary authorities, their USD exchange rate matters a lot. Bearing in mind the trading and borrowing needs of these countries it should be the RMB exchange rate which matters most. This reflects the confidence of non-residents in China’s economic strength and RMB’s purchasing power. Otherwise they risk a disconnect, trading with one and pegging to another.

At the same time measures taken at the beginning of RMB internationalisation should be re-enforced. Authorities should again follow a two pronged approach, measures focused on the current account and measures focused on the financial account.

The current account measures are denomination of exports and imports in RMB, payment and settlement in RMB and increasing settlement through the China International Payment System. For China being the major trading partner for more than 50 countries, this should be a logical first step. The example of bilateral trade with Russia, denominated and settled in RUB or RMB via the CIPS is a case in point. Other countries, including energy and raw material exporters to China should follow this. The same should apply to Chinese exports, which should be denominated and settled in RMB with quick repatriation of export payments. This would also help the capital account as export proceeds not repatriated are known as hidden capital exports.

The Global Financial Integrity has highlighted recently the disguised capital exports from misinvoicing imports and non-repatriation of export returns.

The financial account measures include FDI, inward as well as outward in RMB, cross border banks loans as well as deposits denominated in RMB, and foreign investment in RMB denominated securities, equities as well as bonds. Foreign borrowers should be encouraged to borrow in RMB, through both onshore Panda Bonds and offshore DimSum Bonds.

The Belt and Road Initiative (BRI) offers a golden opportunity to boost RMB internationalisation. Projects should be calculated and invoiced in RMB. As most suppliers are Chinese companies this should be welcome. The loans extended by Chinese banks, first and foremost the China Development Bank, the China Import Export Bank but also the major commercial banks should be denominated in RMB. These banks should match their currencies rather than hedging on exchange rate expectations. The recipient countries will incur a RMB liability, repayments as well as debt service. Hedging instruments in RMB should be available, free of any penalty such as reserve requirements on RMB forwards. BRI countries should also be given the possibility to tap into the Panda Bonds market, covering their RMB financing needs. The recent authorisation for Malaysia to issue Panda Bonds in a case in point. Ultimately they might use existing swap arrangements with the PBoC to obtain RMB.

The Bank of Korea has been very creative using the RMB/KRW swap facility, using these for individual transactions rather than as a liquidity instrument. Korean importers of Chinese goods trigger the swap arrangements, providing Chinese banks with KRW. Alternatively, collateral and guarantees in KRW are issued to Chinese banks. Such arrangements should be extended to weaker currencies, such as the PKR.

Bank lending from mainland China but also from overseas branches and subsidiaries of Chinese owned banks should be through RMB. The concluded interbank associations with BRICS countries, SCO countries, the ASEAN association, the CEEC, Africa and Arab interbank associations already stipulated the goal of boosting RMB lending.

Investment in the buoyant RMB onshore securities market, in equities as well as bonds has performed reasonably well in the recent downturn of RMB internationalisation. PBoC Governor Yi Gang outlined the further path of RMB globalisation in the recent Lujiazui Forum. He focused on RMB denominated assets and the role to be played by Shanghai as a centre for RMB investments. He reminded of the Hong Kong Shanghai Stock and Bond Connect, of the Shanghai Gold Exchange and Crude Oil Futures, alleasing the access to RMB denominated assets.

While the further opening of China’s capital account is subject to the US-China trade negotiations, the potential under existing  regulations has not been fully utilised. Many foreign fund managers view their existing RMB portfolio as sufficient and make deeper involvement in RMB onshore markets dependent on further reform not only of the trading system, but also on the transparency of financial information and the adoption of international accounting and reporting standards.

In the onshore bond market the most attractive securities are China Government Bonds. Bonds issued by subnational governments, financial and corporate bonds carry a lot of uncertainty regarding regulation, supervision and credit risk.Their performance does not follow textbook rules due to idiosyncrasies of the Chinese bond market which makes it difficult for long term foreign investors to predict performance.

The stock market is considered as too volatile, given the large share or individual investors.Major participation of institutional investors would lend stability to the market. Other concerns are insider trading and distorted company news. These have been addressed by the supervisory authorities. However, the inclusion of Chinese equity in the MSCI and recently in the FTSE/Russellwill boost confidence of international investors in addition to pouring passive funds tracking the indices into the Chinese stock market.

Conclusion

The present trade tensions,which are set to continue have narrowed the scope for monetary and exchange rate policy. However, Chinese authorities have levers at their disposal to boost the internationalisation of RMB. They include clear leadership in monetary and exchange rate policy for other EME currencies to follow. The main candidates are China’s major trading partners, but also the BRI countries, which would benefit from eliminating the USD conduit. This would get rid of the exchange rate distortions when trade and investment is denominated in USD. As China integrates into the world economy with a more open attitude, the soundness of the Chinese economy and finance will be transferred to partner countries through this mechanism.

编译  欧阳泉

来源  Financial Times