SOURCE: ARC China

October 14, 2010 13:28 ET

Adam Roseman's Commentary on the Globalization of China's Renminbi Featured in October 12th, 2010 Edition of ARC China Weekly Newsletter

SHANGHAI, CHINA--(Marketwire - October 14, 2010) -  ARC China has released the latest edition of its newsletter ARC China Weekly. The publication includes a commentary from ARC China Founder Adam Roseman as well as articles covering topics of general interest with a focus on consumer and retail, alternative energy, recent investment transactions in China's current news, and transactions in the Middle East, Europe, and the United States. 

Roseman's foreword focuses on the role of China's renminbi currency in international trade. Despite the prominence of China's economy as the second largest in the world and by far the largest exporter, China's renminbi has yet to achieve similar distinction in cross-border trade.

Even still, the global financial crisis may have marked the beginning of the end for the US dollar's dominance over the global economy and a transition towards greater importance for the renminbi.

China is currently taking steps to broaden the use of the renminbi among international investors, as China's government believes that prominence in the global economy goes hand-in-hand with prominence in the global monetary system.

In June 2010, China's government expanded the scope of a year-old pilot scheme for settling cross-border trades in renminbi, opening it up to the world. Global banks such as HSBC, Deutsche Bank and Citigroup have since been encouraging companies from London to Tokyo to use the Chinese currency rather than the dollar. Some even offer discounted transaction fees as an incentive.

One of the obstacles to greater global use of the renminbi is the lack of means by which foreign companies can invest their renminbi or hedge their exposure to the currency. Strict capital controls place China's financial markets almost entirely off limits. This is gradually changing, however. Last month, China opened its domestic interbank bond market to foreign central banks and commercial banks that have accumulated renminbi through cross-border trade settlement. Curbs on the free flow of renminbi in Hong Kong have also been lifted. Since July, financial groups in the special administrative region have been able to create a range of renminbi-denominated investment products and hedging tools that are all open to global companies and investors.

With the US dollar and yen gradually giving way, the trend is towards a wider array of internationally accepted trade currencies. This shift, along with China's policies for further integration with the world's financial markets, will continue to increase the role of the renminbi in cross-border trade.

The newsletter can be found online at http://www.arcchina.cn/this-week-in-china/volume-81/.

About ARC China

ARC China is an investment firm focused on investments in entrepreneur-owned small and medium sized enterprises located in Tier II and Tier III Chinese cities. We seek to create value for our investors and companies we invest in by applying our professional experience and relationships to help companies upgrade their management teams, technology, systems, and business processes. Our team of experienced investment professionals and in-house due diligence analysts deploy a proven and unique on-the-ground activist investment strategy of making value-oriented highly involved, exit-driven equity investments in a diversified portfolio of domestic consumption-focused high-growth Chinese businesses. For more information, please visit http://www.arcchina.cn.

Contact Information

  • Contact:

    Adam Roseman
    ARC China
    182 Chang Shu Road
    Xu Hui District
    Shanghai 200031, P.R. China
    Email: Email Contact