Rising currency: The charge of the renminbi

China hopes to one day challenge the dollar’s dominance

The World Today Published 25 September 2015 Updated 11 December 2020 2 minute READ

Dr Paola Subacchi

Former Research Director, International Economics

What actually is the renminbi? Recent financial volatility seems to suggest that the Chinese currency has become a significant player in international finance. After all, it can move international markets. The cut in its daily reference rate by 1.9 per cent in August – allegedly to make it more market-driven – sent shockwaves through the world’s stock exchanges.

Yet the renminbi remains a non-convertible currency with limited circulation outside China, underscoring an unprecedented situation in which China is the world’s second largest economy and biggest exporter, yet lacks a currency that fully reflects this role.

The world’s largest economies – the United States, Europe and Japan – all have currencies with extensive international use, both to invoice and settle trade deals and to store value.

Subscribe to read all issues

Articles from the current issue are free to read by all, the archive is exclusive to magazine subscribers and our members. Subscribe or become a member to view articles from the archive.