The rise of the Renminbi

China continues to make steps in its liberalization of the Renminbi. Currently about 9% of China’s trade is conducted in Renminbi, and this is undoubtedly going to continue to increase. Not only does China want to reduce its reliance upon the US Dollar, but liberalization of its currency and money markets in general are necessary for Chinas continued economic development. Opening her capital account will inevitably loose China an element of control over its interest rate policy and currency – something the Chinese government, wisely, will only do when conditions are right for China. Full convertibility may be many years off yet, but once fully convertible, the Renminbi may well eclipse both the Euro and the US Dollar.