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From Greenback to Renminbi – the Internationalisation of CNY

by Peter Wong, Chairman, IACCT (China)

China entered the ‘brave new world’ in 2001 when it became the latest member of the World Trade Organization (WTO). State-owned banks at the time were saddled with non-performing loans. Foreign exchange reserves were at a modest US$200bn level. Standard & Poor’s then assigned a BBB sovereign credit rating to China.

A decade later, China became the world’s second largest economy with the most sizeable foreign exchange reserves (US$3.2tr as of August 2011). All the Big Four state-owned banks are listed with CAR above the 11.5% minimum set by the domestic regulator. ICBC ranks No.1 among banks globally and has set its goal to achieve 10% of global business by 2016. Standard & Poor’s have assigned a double-A-minus rating on China.

Towards a market economy

China is in dynamic mode and change is constant. As it moves from a state-controlled central planning to a market-based economy, policy tools are gradually moving towards fine-tuning rather than achieving specific quantifiable goals. China continues to experiment, to innovate, to invest and to adjust. The expectation is changing for the better.