China is turning its talk about making the renminbi an alternative to the dollar into action, said Qu Hongbin, China chief economist at HSBC.
He told the Financial Times that China is moving faster than expected to make the renminbi a truly international currency.
“China is beginning an ambitious scheme to raise the role of the renminbi in international trade and finance and to reduce reliance on the U.S. dollar,” Qu said. “This will likely be a multi-year and gradual process. Yet, we believe the pace is likely to be faster than many expect.”
The move could mean that half of China’s $2 trillion annual trade total is settled in renminbi by 2012, a far cry from the 10-percent total today.
Hu echoed what U.S. officials have been saying for years: internationalization of the renminbi should be a major priority, matching China’s rise up the economic ladder.
China announced a program last week enlarging renminbi settlement accords between Hong Kong and five major trading cities.
China also has initiated talks with other central banks in Asia to create more swap agreements, covering all the country’s trade within the continent, excluding Japan.
Most experts anticipate the dollar’s role as a reserve currency won’t be challenged for some time.
But World Bank President Robert Zoellick told Reuters: "The U.S. should take all these (remarks by) commentators as serious statements about the need to preserve the unique status of the dollar as a reserve currency."
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