Saturday

15th Aug 2020

Chinese yuan to be convertible with euro by 2015

  • China aims at making the yuan a reserve currency like the euro (Photo: EUobserver)

China is seeking to make its currency fully convertible by 2015, officials said in Beijing, a move which may help the ailing euro and dollar, which are losing against an under-valuated yuan.

Chinese officials told the EU business community in Beijing that the yuan will achieve "full convertibility" by 2015, Davide Cucino, the head of the EU's chamber of commerce in China said in a press conference on Wednesday (8 September).

Read and decide

Join EUobserver today

Support quality EU news

Get instant access to all articles — and 20 years of archives. 14-day free trial.

... or subscribe as a group

“We were told by those officials by 2015,” Cucino said, as quoted by the Bloomberg news agency. The process will be a gradual one, he added.

A similar timeline is being floated by Asian currency experts as well. "It's not beyond imagination that the renminbi could become fairly, if not fully, convertible in the next five years," Monish Mahurkar from the Asian Development Bank said during a conference in Hong Kong, Dow Jones reports.

Currently, the Chinese yuan (RMB - remnibi) is held within strict margins by the People’s Bank of China, which sets a rate each morning around which the currency can trade. This policy has for a long time prompted criticism from Europe and the US that the remnibi is under-valued, hurting European exports, among others.

China, the second-largest economy in the world, also limits conversion of the yuan for investment purposes. But by 2015, this may change, allowing the remnibi to become a reserve currency alongside the US dollar and the euro.

Chinese Vice Premier Wang Qishan is due to meet British chancellor George Osborne on Thursday in London. According to the Financial Times, Wang will back efforts by British banks to establish a yuan offshore trading center in London’s financial district.

Chinese ratings agency

Meanwhile, China’s Dagong ratings agency put forward plans to expand on an international level and strengthen ties with the world’s three largest graders of debt - Standard & Poor's, Moody's and Fitch.

The China Daily newspaper reported that Dagong CEO Guan Jianzhong hopes the planned new agency will obtain a leading position in the rating market within the next five years. The company will be set up branches in Europe, the US, Brazil, Russia, India and South Africa, the paper said.

Founded in 1994, Dagong has already had co-operation with overseas ratings agencies in Japan, South Korea and Brazil. On 3 August, Dagong cut its sovereign rating for the US by one notch to A, on a par with Russia and South Africa. Two days later, Standard & Poor's followed suit, cutting America's triple-A rating to AA+ and causing a storm on financial markets.

EU officials have repeatedly criticised the quasi-monopoly of US ratings agencies, whose scathing assessments of euro-countries' capacity to pay back their debt has inflamed markets and contributed to the skyrocketing debt costs for Greece, Portugal, Italy and Spain.

But Dagong has made similar moves, even as it maintains higher ratings for the euro-countries than the 'big three'.

Following the 21 July deal on a second Greek bail-out, Dagong said that "the new rescue plan is expected to prevent Greece from unilateral default by 2014, but the solvency of the state thereafter is still not encouraging."

But it welcomed the agreed changes to the eurozone bail-out fund (EFSF), saying that if approved, the measures "will enhance the ongoing credit ratings of other members in the eurozone."

China agrees to gradual increase in value of yuan

China's announcement that it will allow the yuan to slowly appreciate has been welcomed by the European Commission, although latest signals suggest any rise is likely to be very gradual.

EU moves to rein in ratings agencies

The EU commission on Monday for the first time indicated how it plans to regulate ratings agencies after several run-ins over their decisions on the credit reliability of ailing eurozone members.

China urges Germany and France to solve euro-crisis

Chinese Prime Minister Wen Jiabao on Thursday offered vague promises to buy bonds from troubled euro-countries, but said that it is ultimately up to Germany and France to solve the crisis.

News in Brief

  1. Most EU states oppose US sanctions on Russia pipeline
  2. UK imposes quarantine on France, Netherlands, Malta
  3. At least 3.5m EU nationals to stay in UK
  4. UK urged to 'calm down' on migrants
  5. Pompeo starts EU tour with anti-Chinese 5G deal
  6. Dutch lawsuit seeks billions from tech firms
  7. Amazon people urge EU banks to stop funding pollution
  8. Russia vaccine could be "dangerous", Germany says

Column

Lebanon is a new focal point

More than the tangible destruction, the explosion in the port of Beirut meant the ultimate destruction of hope for many civilians.

Stakeholders' Highlights

  1. UNESDANext generation Europe should be green and circular
  2. Nordic Council of MinistersNEW REPORT: Eight in ten people are concerned about climate change
  3. UNESDAHow reducing sugar and calories in soft drinks makes the healthier choice the easy choice
  4. Nordic Council of MinistersGreen energy to power Nordic start after Covid-19
  5. European Sustainable Energy WeekThis year’s EU Sustainable Energy Week (EUSEW) will be held digitally!
  6. Nordic Council of MinistersNordic states are fighting to protect gender equality during corona crisis

Join EUobserver

Support quality EU news

Join us