First Financial Daily: Many people think that the financial crisis has given the RMB internationalization strategy opportunities. How do you see this problem?

Pan Yingli: Indeed, after the financial crisis, the global memory in the objective of the international demand for currency substitution. Due to the long-term depreciation of the dollar trend is increasingly apparent, whether structural defects euro European financial integration by advancing to overcome them are still great uncertainty.

As the world's second largest economy and largest creditor, China's future economic growth is still 20 years can be expected, which will support governments and international investor confidence in the long-term RMB, the yuan has become the most important worldwide international alternative reserve currency.

However, the sovereign currency acts as the International Monetary requires three conditions, namely international recognition, currency stability and monetary liquidity.

In terms of international recognition, the main problem is that the renminbi is lagging behind the rule of law is weak and soft power. Long-term stability of the renminbi's success depends on China's economic transformation. If the economy can not be successful transition, then the front of the RMB yuan appreciation is expected to only trigger speculative boom, which has a short-term speculative boom instability, destructive and reversible, helpless in the true sense of the RMB internationalization. Currency liquidity depends on whether the huge national monetary sovereignty, good liquidity, growth and stability of the convertible capital markets and capital account superb currencies.

These three elements have been given a certain extent, the field of government need to actively promote the internationalization of the RMB as: the rule of law, economic restructuring and capital market development. Therefore, the RMB internationalization can not be achieved, can not be hurried.

Trade structural constraints

Daily: currency internationalization is an important prerequisite if international trade support. Currently in the implementation of the RMB trade settlement. Do you think there is a good trade micro-foundation support?

Pan Yingli: After the global financial crisis, the Chinese government will rise to the internationalization of the RMB national strategic level, the introduction of relevant policies to actively promote cross-border trade in RMB. But two years of RMB trade settlement pilot showing asymmetry problem, namely the import trade settlement accounts for about 90% of the total RMB settlement. As a result of the appreciation of the renminbi foreign exporters interests, China has accumulated depreciation of the dollar risk more reserves, there has been counterproductive state. An important feature of their own import business under adverse circumstances to use RMB settlement, reflecting the government administration, driven by the pursuit of the number of indicators of RMB settlement.

From the trade perspective, currently in China at the end of the vertical international division of labor, China's imports of intermediate goods from Asian countries, processed and then exported to the United States and Europe. Asian countries such vertical rather than horizontal division of labor division, which is the demand of each other trading partners, will restrict the development of RMB regionalization in Asia.

Through the Asian country's trade deficit, while the output of the renminbi, we will accumulate more dollar reserves in the trade surplus in developed countries. Chinese exports to the United States and Europe are relatively low-end product is purely a buyer's market, Chinese companies at a disadvantage negotiations, the right to choose pricing and settlement currency.

Thus, in the restructuring of trade, how to participate in the international division of China's transition from vertical to horizontal, is required to complete the transition process of internationalization of the RMB trade in.

Capital account liberalization will lead to the undervaluation of assets at fire sale

Daily: how do you see the internationalization of the RMB capital account convertibility required?

Pan Yingli: As an important condition for the international reserve currency, the currency issuers must provide sufficient liquidity to the holders. This liquidity has two meanings: First, yuan-denominated financial assets markets must have adequate liquidity; the second is to compare the yuan freely convertible into other currencies. In the latter case, China's capital account is not yet implemented more fully convertible.

Full capital account convertibility need three conditions: the interest rate market and the banking system has a certain international competitiveness; domestic capital market, especially the bond market needs to be more fully developed; the exchange rate at a reasonable level. Liberalization of the capital account if the yuan undervalued, it will undoubtedly lead to cheap domestic assets. Therefore, the creation of capital account convertibility of the yuan fully conditions need to accelerate financial reform, financial deregulation, accelerate the development of multi-level capital market system.

In addition, the government also needs to make a difference in exchange rate policies. In the case of undervaluation, the government should focus on irregular adjust gradually to the central exchange rate relative to a reasonable level.

Promoting the "export of capital, trade backflow"

Daily: What is your understanding of the RMB internationalization is promoting the idea?

Pan Yingli: Current promoting RMB internationalization need to respect the three realities of China's economy, and as a starting point: 1. Can not and should be implemented in the short term capital account convertibility of the renminbi; 2. Internal market will take time to develop export-oriented economy still has its inertia; 3. Financial system more fragile, relatively limited government macro-control ability.

Therefore, the idea of promoting the internationalization of the RMB should be "trade under the outflow of capital account backflow" into "capital account output, trade under reflux" promotion strategy.

Daily: What specific path or focal point to promote?

Pan Yingli: First, the real economy from foreign exchange to meet internal needs to start, promote yuan-denominated settlement and payment in merchandise trade by trade finance and corporate foreign direct investment; explore the introduction of relevant policies to encourage private equity and other institutional investors foreign equity investment, which will greatly enhance the efficient allocation of foreign exchange assets in hedge foreign exchange risks, promote the absorption of foreign advanced technology and domestic industrial upgrading.

Second, speed up the process of internationalization of Chinese banks from commercial banks outside the deposit and lending business and related services to start.

Third, the development of the local bond market internationalization of the RMB is an important part of the internationalization of RMB. The current need to accelerate the yuan-denominated government bonds in emerging market economies and resource-based countries of distribution in the Mainland and Hong Kong to promote the accumulation of foreign residents in China's yuan debt. This not only helps the export of Chinese products, but also help Chinese imports of resource products denominated in RMB, RMB liabilities because resource-income countries need to exchange yuan to settle by resource exports.