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MNI张明专访:通过发展天然气与铁矿石本币计价合约来提振人民币地位

 

 

注:本文为MNI记者王媛媛对笔者的专访,于2020年6月12日发布,转载请务必征得MNI同意。

 

BEIJING(MNI) - China, the world’s biggest importer of natural gas and iron ore, should develop contracts for the commodities denominated in yuan, boosting the currency’s use in international commodities pricing domain and potentially propelling it into third place behind the dollar and the euro in the forex pecking order within a decade, a government advisor told MNI, cautioning that tension with the U.S. may dent its attractiveness but only in the short term.

In addition to promoting the yuan in the countries of its Belt and Road initiative, China could also further open its domestic markets and create more financial products to provide investors with a deeper pool of assets, and for now, to complement planned large-scale issuance of Treasury bonds and local government special-purpose debt, Zhang Ming, senior fellow at the Institute of World Economic and Politics under the Chinese Academy of Social Sciences, said in an interview.

While, this year, the currency may face a bumpy ride if trade conflict with the U.S. intensifies, China’s relative resilience in the face of the Covid-19 pandemic will tend to increase the attractiveness of its currency longer-term, Zhang said. A flare-up with Washington, which could include targetting China’s financial sector later in the U.S. election campaign, could potentially prompt investors to sell, pushing the yuan to as low as 7.4 from the current 7.0827, he said, noting that the experience of the last 10 years has shown that progress towards internationalisation has tracked the performance of the exchange rate.

But a strong counterbalance will come from China’s economic performance. GDP should grow by 2-3% in 2020, while other major economies contract, Zhang said, adding that growth could pick up to 2% in Q2, then to 6% and 7% in subsequent quarters.

The conflicting forces of economic fundamentals and Sino-U.S. conflict complicate exchange rate forecasts, but Zhang said he expected the yuan could appreciateto 6.7 if the fundamentals take the lead.

Efforts to promote use of the Chinese currency stalled from 2016 to 2017, following the unexpected devaluation by the People’s Bank of China in August 2015. The interest rate differential with the U.S. narrowed and capital controls had to be tightened to curb outflows.

More importantly, according to Zhang, official strategy to promote the yuan relied too heavily on yuan settlement, offshore hubs and bilateral PBOC currency swaps, which generated interest rate and foreign exchange arbitrage, rather than any real need for the currency at a time when its interest rates and exchange rate regimes remained rigid, he said, adding that such demand was also more volatile and price-dependent.

Invoicing is more important than settlement for an international currency, said Zhang. Yuan-denominated iron ore and gas futures should be added to existing crude oil contracts, followed by others for commodities such as for soy and maize. This would enhance Chinese pricing power and reduce exchange rate risk for local buyers, he said.

Offering more financial products in domestic markets would both lure overseas investors and attract offshore yuan accumulated from oil and gas futures, boosting capital inflows.

Project financing and direct investment by Chinese companies could also cultivate demand for yuan for invoicing and as a reserve currency in the countries along the Belt and Road, particularly in Southeast Asia. The yuan has already surpassed the yen in some of that region’s currency baskets, Zhang noted.

Lack of exchange rate flexibility remains a big obstacle to internationalisation, Zhang warned, calling on the central bank to accelerate liberalisation. Otherwise overseas investors may be less willing to hold yuan assets for fear of tightened capital controls or forex market intervention by the PBOC.

Zhang saw little impact on the yuan from any U.S. retaliation against Chinese plans to impose its security law on Hong Hong, the most important yuan hub.

 



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