Professor Ahsan Iqbal, Pakistan’s Minister of Planning, Development and Special Initiatives, has explained that Pakistan has long been supportive of China’s ambitions to expand the use of their renminbi (RMB) as a global currency.
We are promoting transactions in RMB for big projects under CPEC like the Main Line 1 project, which is almost US$9 billion. We are trying to structure its deal in RMB and we are already working with Chinese companies who have major projects with transactions made in RMB.
Iqbal said earlier this week
The Silk Road Briefing added, ‘Pakistan has already signed a memorandum of understanding (MoU) with China to facilitate the use of RMB in bilateral trade and investment. The agreement between China and Pakistan provides a platform for the two countries to foster closer economic ties and promote trade and investment using RMB.’
There are three stages for renminbi internationalization– first is the global use of renminbi in small-scale international trade, then in commodity trade and finally the transformation of renminbi into a reserve currency.
Zhang Chao, a researcher at Taipei Institute, a Beijing-based think tank told a state-controlled Chinese media the National Business Daily.
If more Pakistani products can enter China and other countries in the region, we will be able to earn more precious foreign exchange. Also, we must diversify our economic landscape, such as introducing more currency settlement models, such as RMB, especially in special economic zones and free trade zones under the CPEC framework.
Dr. Hassan Daud Butt, Associate Professor and former Project Director of CPEC, said
Earlier this month Pakistani outlet Daily Times reported that “Pakistan one of leading countries to use RMB for international trade,” reported:
Pakistan is one of the leading countries to use RMB for international trade settlement, according to China Economic Net (CEN). Last November, People’s Bank of China (PBOC) signed a memorandum of cooperation (MOC) on establishing RMB clearing arrangements in Pakistan, with Karachi Branch of the Industrial and Commercial Bank of China (ICBC) acting as the RMB clearing bank. It bodes well for Pakistan to join the RMB settlement service as it encourages industrial transfer by assuaging the concerns of Chinese investors on financial losses due to the violently fluctuating exchange rate in Pakistan. As more progress is yet to unfold, RMB-PKR de-dollarisation is expected to play a catalysing role in Pakistan-China trade.
According to Guan Tao, a chief economist of a leading Chinese securities trader, the overall gloomy outlook on global economy this year and the international confidence in China’s performance are enhancing the attractiveness of RMB assets. Meanwhile, against the backdrop of volatile US dollar policies, more countries are diversifying their currency portfolio to hedge against financial risks. RMB, as the fifth largest currency for international payments and foreign exchange transactions, is eyeing a boom in its international usage.
AUTHOR COMMENTARY
The rich man is wise in his own conceit; but the poor that hath understanding searcheth him out.
Proverbs 28:11
There are again people who are living in loopy la-la land that America will never lose it’s reserve status. This, again, will not happen overnight, but it has been transpiring for some time now, and it is now entered into overdrive; and Pakistan’s new agreements are proof that.
Read more about the rise of BRICS and de-dollarization here.
[7] Who goeth a warfare any time at his own charges? who planteth a vineyard, and eateth not of the fruit thereof? or who feedeth a flock, and eateth not of the milk of the flock? [8] Say I these things as a man? or saith not the law the same also? [9] For it is written in the law of Moses, Thou shalt not muzzle the mouth of the ox that treadeth out the corn. Doth God take care for oxen? [10] Or saith he it altogether for our sakes? For our sakes, no doubt, this is written: that he that ploweth should plow in hope; and that he that thresheth in hope should be partaker of his hope. (1 Corinthians 9:7-10).
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