Xinhua, June 3, 2012
The direct trading of the Chinese yuan and
Japanese yen that began from June 1 in Tokyo and Shanghai is "definitely a
win-win game for both sides," according to a senior economist of the Asian
Development Bank Institute.
The direct yuan-yen trading could reduce the
transaction cost and exchange risk in bilateral trading and investment, and
Japanese and Chinese companies involved will benefit from the new system. said
economist Xing Yuqing in an exclusive interview with Xinhua.
"However, the most important implication of
the direct trading is that the Japanese yen and Chinese yuan will be utilized more
in the future. I think this is the major objective for the two governments to
work together to promote bilateral direct trading," Xing said.
Statistics of the Asian Development Bank
Institute show that only 0.3 percent of the Chinese commodities exported to
Japan and 1.7 percent of goods China bought from Japan were settled in yuan in
2011, while trade deals settled in yen are slightly higher, as the institute's
2009 figures show that 18 percent of China's exports to Japan were settled in
yen.
"With the direct yuan-yen trading, the role
of the U.S. dollar in bilateral trading between China and Japan would become
less and less important. This might signify a gradual departure of the two
countries from the dollar," he said.
The U.S. dollar has long been the vehicle
currency for bilateral trade and investment between China and Japan, and
volatility of its exchange rate is the major concern for everyone involved in
trade between the two countries.
To Xing, the direct trading agreement is also a
major step for the internationalization of the Chinese currency. "Before
the Chinese yuan becomes an international currency, it should be a regional
currency first."
Japan, the world's third largest economy and the
second largest trading partner of China, is a perfect partner to promote the
utilization of yuan, or renminbi, he said.
"That will build up a solid footing for
renminbi on the way to be a regional currency and eventually become an
international currency," he said. "In my opinion, the next natural
step for Japan is to reach an agreement with China to set up a renminbi
offshore market in Tokyo. Japan will benefit a lot from renminbi's
internationalization."
The yuan-yen direct trading will also inject
vitality into Tokyo's financial market, Xing said.
According to the economist, the Japanese yen has
been an international currency for decades but its share is very low, so the
internationalization of yen can be considered as a failure. The trading of the
Chinese yuan, particularly yuan-denominated assets will provide new business
opportunities for Japanese financial institutions in the post-crisis era.
From a long-term perspective, the yuan-yen
direct trading will help both yuan and yen play a greater role in international
trade and financing, and it may bring changes to the current international
monetary system, Xing said.
