Redefinition of the Role of Asia-Pacific Region in the Global Economy

In 2009, China initiated steps to promote the internationalization of its renminbi. Today, Beijing’s strategy has proven to be effective as the use of the renminbi outside China’s borders has been steadily increasing over the last few years. In order to further promote the currency internationalization process, China initiates the pilot liberalization of the financial sector in the Shanghai Pilot Free Trade Zone (SFTZ), established in 2013, to facilitate the use of renminbi in cross-border trade and investment. In SFTZ, the residents of the zone are allowed to undertake cross-border investment, financing and hedging transactions through a new category of dual renminbi and foreign currency bank account, and companies based in SFTZ also are allowed to conduct offshore renminbi borrowing. The liberalization on cross-border renminbi business reflects Beijing’s efforts to internationalize its currency while giving a boost to SFTZ as more mainland companies will seek renminbi borrowing.