JACOBO F. TORRES
9-10-14
CASE DISCUSSION: YUAN GOES GLOBAL
1. How does the Chinese government limit the use of the Chinese currency, the
RMB, on the global currency markets?
The Chinese renminbi (RMB) is controlled by the Chinese Government. Over the past
decade, the RMB has been under strict regulations, which restricted the flow of the
Yuan out of the country. However, this is changing. At the moment, the Yuan is starting
to gain presence in the global market as an international currency. The way the Chinese
government controls their currency is through the settlement of trade transactions.
Typically, the currency used in the Chinese exports was the USD ($). For example, in
2009, only 1% of the total Chinese exports ($1.2 trillion) were paid in RMB. The goal
of this strategy was to keep the Yuan in the domestic market. Nevertheless, in 2011, the
rate increased to 7%. This was possible due to a gradual change in the Chinese policy:
