Translated Abstract
The integration of world economy has been developing rapidly from single pole to multiple poles. The vulnerability of USD gradually comes up to the surface. Weak USD is incapable of the responsibilities as the sole anchor currency in the international monetary system, which provides a foundation for the world’s new multiple international monetary system and China’s strategy of RMB internationalization. With emerging economy, China’s dominant currency has become indispensible in the world’s trading market and financial market. However, USD and Euro play a dominant role in current world currency order. Exerting an influence on the existing interest structure for sure, RMB internationalization still has a zigzag and long way to go. In Kazakhstan in 2013, President Xi Jinping put forward the “Five Circulations” in the construction of the Silk Road economic belts, the circulation of currency as the basic and core link in the construction of the “Five Circulations”. As the medium of exchange in trading and investment, the RMB internationalization along the Silk Road economic belts will bring a joint development of China and the other five countries in middle Asia for sure.
RMB internationalization refers to the process that, as the dominant currency, RMB can play its roles of a currency across the borders and be recognized by the international community. Our frequent trading with the five countries in the middle Asia along the Silk Road economic belts will facilitate RMB circulation in the middle Asian countries for sure. The cooperation of commodity trading is accompanied with financial cooperation. Financial institutions accelerate the expansion of trade scale in the form of credit expansion. The cooperation on the capital market speeds up RMB’s circulation frequency on the financial market while the cooperation of financial industry speeds up RMB’s embedment in the entity operation. In the meantime, RMB’s back flow channels are formed with the RMB investment and purchase of financial products by foreign capital. The trade cooperation and financial cooperation form a circulation of RMB in the five middle Asian countries along the Silk Road economic belts. RMB circulation becomes faster with the expansion of trade cooperation and financial cooperation. RMB internationalization towards the western areas deepens. Currency cooperation as the ultimate form of regional cooperation of RMB, the basket currency model, with RMB as the anchor currency, finally realizes the objective of RMB internationalization along the Silk Road economic belts.
This paper studies the route of RMB internationalization along the Silk Road economic belts in three parts. By experience analysis and empirical analysis, the first part designs the general route of RMB internationalization along the Silk Road economic belts and of trade cooperation, financial cooperation and currency cooperation. The second part proves the theoretical feasibility of the general route with theoretical researches. The last part studies the specific routes of trade cooperation, financial cooperation and currency cooperation in three chapters respectively.
This paper draws four conclusions. Firstly, trading cooperation, financial cooperation and currency cooperation can realize the objectives of “breakthrough”, “intensification” and “realization” for RMB internationalization along the Silk Road economic belts. Secondly, during the trade cooperation, China has launched the ground for the cooperation with the five countries in middle Asia. With “petroleum-RMB” mechanism, China firstly cooperates with Kazakhstan in petroleum trade. In terms of the selection of internal areas, China shall firstly promote the western areas to cooperate in trading with the five countries in middle Asia. In the competition for trading market in the five countries in middle Asia with developed countries, China shall adopt different trade routes aimed at low technological commodities and high technological commodities. Thirdly, with the ground for financial cooperation with the five countries in middle Asia, China shall make a breakthrough of financial cooperation based on infrastructure construction and energy trading and take the route of cooperation on financial institutions, capital market and financial industries. Fourthly, both China and the five countries in middle Asia have not yet possessed the conditions for optimal currency regions put forward by Mondale. However, RMB possesses overwhelming advantages in the monetary competition along the Silk Road economic belts. RMB as the anchor currency, the basket currency model can realize the objective of RMB internationalization along the Silk Road economic belts.
Firstly, this paper put forwards the theoretical analysis frames for RMB internationalization along the Silk Road economic belts. By historical deduction, experience research and empirical analysis, the general route of trade cooperation, financial cooperation and currency cooperation for the realization of RMB internationalization along the Silk Road economic belts has been demonstrated.
Secondly, this paper extends the applicable scope of Mondale’s optimal currency region theories to developing countries. With the analysis of trade density index and OCA index, the conditions of currency cooperation along the Silk Road economic belts are identified. The suboptimal currency cooperation route is formed by the verification by the competing model and G-PPP model that the Silk Road economic belts are not up to the conditions for Mondale’s optimal currency regions.
Thirdly, this paper demonstrates that the trading of petroleum and infrastructure construction is the key to the trading cooperation along the Silk Road economic belts. With Grubel-Lloyd trade index and panel data model, the order of regional trade cooperation has been decided, with China’s western areas as the first to cooperate with Kazakhstan. Commodities classified into homogeneous type and heterogeneous type, the specific operational route for the trade cooperation along the Silk Road economic belts has been analyzed by competition method.
Fourthly, subject to the policies and economic restrictions of the five countries in middle Asia towards foreign capital, this paper put forwards the route of cooperation of financial institutes, capital market and financial industries. It creates the model of financial industry cooperation under the government credit conditions and put forwards the practical route of financial cooperation along the Silk Road economic belts.
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