A View from the People’s Republic of China

Monetary cooperation in East Asia has been slow over the last decade, hampered by lack of leadership and political will. The Chiang Mai Initiative represents important progress but unilateralism in exchange rate coordination still prevails. The global financial crisis has failed to confirm the necessity of monetary cooperation and the European financial crisis has dealt a fatal blow to the aspiration for an Asian monetary union and an Asian common currency. Regional monetary cooperation will be more ad hoc in the foreseeable future. Renminbi internationalization reflects China’s intention to go its own way to safeguard its own interests. However, East Asia should not give up its efforts toward regional monetary cooperation. Perhaps, the wider use of local currencies in trade, investment, and financial transactions represents a new way forward. As the global economy may have entered a long recession, East Asia must shift its growth paradigm to rely on domestic demand.