Can the Renminbi Rise as a Global Currency? The Political Economy of Currency Internationalization

Can the renminbi develop into a global currency? In the near future it seems unlikely. The international political power of the United States remains far greater than that of China at the global level, and is likely to be a significant obstacle to global expansion in use of the renminbi. China’s limited economic size—despite its rapid growth over the past decades—and its persistent current account surplus are in addition likely to pose serious economic checks on global use of the renminbi. Thus, although renminbi internationalization will probably develop to some extent, it is at least in the short term likely to be confined to Asia, China’s hinterland.