China’s monetary policy within the context of Yuan internationalization

Abstract

Introduction. The Renminbi reserve currency gaining process is of vital importance for China’s robust economic development. However, the inconsistency in the intentions of the Chinese government regarding both Yuan internationalization and strict control over capital flows, which is contradictory to the former, requires more detailed analysis, since the soaring Chinese economy is about to play the central role in the world economic environment. Aim of the article is to determine the current state of the Yuan internationalization process as the key component of the Chinese current monetary policy and its effects on the China’ economic development considering the policy of the strict control of capital flows. The method (methodology). By means of the qualitative methods such as observations and surveys, the motivations and reasons of China’s intentions to carry out the Yuan internationalization are found out and analyzed. The quantitative methods have transformed collected statistical and numerical data regarding Renminbi exchange rate fluctuations into comprehensive statistics represented by figures. By applying the logic analysis, the method of absolute and relative values and the system analysis, the current state of Yuan internationalization process in particular and Chinese monetary policy at large is characterized and the effects of reserve currency status gaining on China’s long-term economic development strategy are outlined.The results of research. This paper is designated to address the question of China’s monetary policy of the last decade, as well as the Yuan internationalization process as a key goal of the modern long-term strategy of China’s economic development. The fundamental principles, objectives and possible effects of monetary policy are outlined. The fact of China implementing hybrid policy in regard to the renminbi reserve status gaining is presented. The cause of Yuan exchange rate abrupt drop in the August of 2015 is depicted and analyzed. The improvement to the current growth model of Chinese economy is presented and well-grounded in the paper.Introduction. The Renminbi reserve currency gaining process is of vital importance for China’s robust economic development. However, the inconsistency in the intentions of the Chinese government regarding both Yuan internationalization and strict control over capital flows, which is contradictory to the former, requires more detailed analysis, since the soaring Chinese economy is about to play the central role in the world economic environment. Aim of the article is to determine the current state of the Yuan internationalization process as the key component of the Chinese current monetary policy and its effects on the China’ economic development considering the policy of the strict control of capital flows.The method (methodology). By means of the qualitative methods such as observations and surveys, the motivations and reasons of China’s intentions to carry out the Yuan internationalization are found out and analyzed. The quantitative methods transformed collected statistical and numerical data regarding Renminbi exchange rate fluctuations into comprehensive statistics represented by figures. By applying the logic analysis, the method of absolute and relative values and the system analysis, the current state of Yuan internationalization process in particular and Chinese monetary policy at large was characterized and the effects of reserve currency status gaining on China’s long-term economic development strategy were outlined.The results of research. This paper is designated to address the question of China’s monetary policy of the last decade, as well as the Yuan internationalization process as a key goal of the modern long-term strategy of China’s economic development. The fundamental principles, objectives and possible effects of monetary policy are outlined. The fact of China implementing hybrid policy in regard to the renminbi reserve status gaining is presented. The cause of Yuan exchange rate abrupt drop in the August of 2015 is depicted and analyzed. The improvement to the current growth model of Chinese economy is presented and well-grounded in the paper.