RMB internationalization must be promoted

The Chinese government should accelerate the promotion of the Renminbi yuan as an international hard currency, the official People's Daily said in an article published Friday in its overseas edition.

The article, written by Li Daokui, head of the Center for China in the World Economy with the prestigious Tsinghua University, said the status of Renminbi is completely out of proportion with the Chinese economy, which is now the fourth biggest in the world.

All economies bigger than China had an internationalized currency, he said.

"If Chinese enterprises and government could issue RMB-denominated bonds in the international market, then even if the exchange rate fluctuates, Chinese enterprises and the government would not need to worry about a crisis of international payments.... This is the biggest benefit for a developing country to have a hard currency," the article said.

An internationalized RMB would also free Chinese enterprises from exchange rate risks in international trade, because their costs and sales revenue would be both calculated in RMB, Li said.

The article said the ongoing appreciation of the RMB yuan provided China with a good opportunity to promote RMB as a hard currency by issuing yuan-denominated bonds on the international market.