The new Chinese dragon.

Byline: Hassan Aslam

ONE of the biggest economies in the world has become the first major country to launch the maiden digital currency, the electronic renminbi (e-RMB).

China has over the past 40 years achieved trade, economic and military-geostrategic globalisation. However, it has failed to achieve financial globalisation.

To understand why, let's take a step back and analyse the basics of the Chinese currency first. The renminbi translates into people's money. The yuan is the base unit for the RMB. It is the most dominant currency in the realm of trade globalisation where China has become the highest-exporting nation in the world.

This obviously did not happen overnight. One of the most significant milestones of Chinese trade domination was achieved back in 2002 when China became a member of the World Trade Organisation (WTO) at the behest of the United States of America. This alone was a game changer that allowed China to export in large quantities to the rest of the world year upon year. From there on, China became a global economic leader. Since 1991, the Chinese economy has never grown less than six per cent, reaching the peak of 14.2pc in 2007, ending up being a $14.1 trillion economy as of today.

The e-RMB will start small, but disrupt traditional banking and the post-Bretton Woods System of floating exchange rates

China began giving credit lines to needy countries as a key player in economic globalisation. Many of the borrowers that were unable to repay had to convert the debt into equity - Sri Lanka being just one of the many examples. As a result, companies in China grew massively and turned into giant multinationals.

The Chinese military also achieved geostrategic globalisation. One of the prime examples was the opening up of naval bases in Djibouti located in the Horn of Africa after striking a deal with President Ismail Omar Guelleh in 2015. This was the first overseas military base for China and was built at a cost of around half a billion dollars. This facility significantly increased China's power projection capabilities in the Indian Ocean.

But despite everything, China failed miserably in the realm of financial globalisation. This was primarily because the Chinese financial markets were not open to the rest of the world. This was mainly because of the policies and sentiments of Chinese Communist Party. As a result, the influence of the Chinese currency could never grow like that of the dollar, which remained the reserve...

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