Author: cestmoi

Crude Oil Priced in RMB?   [Copy link] 中文

Rank: 6Rank: 6

Post time 2017-10-24 16:36:11 |Display all floors
sfphoto Post time: 2017-10-24 14:02
There is the issue of liquidity in foreign exchange markets which affects the RMB more than the US ...

And that's also why RMB cannot replace (or reach equal level) USD as international trade currency. The issue of liquidity is something that China would want to solve for prestige of RMB for national pride or whatever, but it cannot accept the real world consequences that it would bring, not in near or mid future.

Use magic tools Report

Rank: 6Rank: 6

Post time 2017-10-24 16:48:07 |Display all floors
Jaaja Post time: 2017-10-24 16:32
My point was that USD is accepted unofficially in much wider range of countries and functions than ...

I agree that the USD is the foreign currency of choice for travelers all over the world but that fact doesn't affect the ability of Chinese tourists to use the RMB as the currency of choice in their travels all over the world. It's not a matter of preference but necessity for foreign merchants who want Chinese tourists to spend their RMB using UnionPay in their host countries.

Use magic tools Report

Rank: 6Rank: 6

Post time 2017-10-24 17:06:29 |Display all floors
This post was edited by sfphoto at 2017-10-25 00:09
Jaaja Post time: 2017-10-24 16:36
And that's also why RMB cannot replace (or reach equal level) USD as international trade currency. ...

Not really. If I am an international trader, I would want to use a currency that is stable over a period of time in order to minimize foreign exchange risks. But if a currency such as the USD is being used as speculative capital, then that implies high volatility which carries high foreign exchange risks. That's why currency markets offer currency futures as a hedge to mitigate such risks.
So the fact that the USD has high liquidity does not qualify it as a trading currency if most of its liquidity is used as speculative capital. The only requirement is for China to increase the liquidity of the RMB commensurate with the volume and value of China's foreign trade. But there's always the risk of financial speculators who want to use the RMB as speculative capital for offshore FX transactions in OTC markets which would decrease the liquidity and affect the volatility of the RMB for international trade. That's why China wants to promote onshore FX transactions in the Shanghai FTZ in order to validate counterparty transactions in OTC markets.

Use magic tools Report

Rank: 6Rank: 6

Post time 2017-10-24 18:11:54 |Display all floors
sfphoto Post time: 2017-10-24 16:48
I agree that the USD is the foreign currency of choice for travelers all over the world but that f ...
It's not a matter of preference but necessity for foreign merchants who want Chinese tourists to spend their RMB using UnionPay in their host countries.


Per your earlier description of how using UnionPay abroad works, I don't see this being related to internalization of RMB - you wrote that it is UnionPay which (in China I assume?) handles the payment to THB merchant in Thailand, so I assumed that UnionPay converts the RMB to THB before settling the transaction in THB. Was that a misunderstanding on my part?

On a unrelated note, in my home country in Northern Europe (and I believe elsewhere too), it is standard practise now that before tourist season, the Chinese guides come to visit local stores and negotiate kickbacks for bringing in Chinese spenders. Questionable perhaps, but (unfortunately in my opinion) not against local laws.

Use magic tools Report

Rank: 6Rank: 6

Post time 2017-10-24 18:50:31 |Display all floors
Jaaja Post time: 2017-10-24 18:11
Per your earlier description of how using UnionPay abroad works, I don't see this being related  ...

You're correct on UnionPay handling the payment to the THB merchant account which is the same as a Visa or MasterCard transaction in USD.

That practice is now banned in China as tour operators are not allowed to force tourists to shop during their tour.  

Use magic tools Report

Rank: 6Rank: 6

Post time 2017-10-24 19:44:20 |Display all floors
sfphoto Post time: 2017-10-24 18:50
You're correct on UnionPay handling the payment to the THB merchant account which is the same as a ...
That practice is now banned in China as tour operators are not allowed to force tourists to shop during their tour.


But technically I wasn't referring to same thing. On one hand you have tour guides making arrangements for profit sharing with the local shops, and on the other hand you have the forced shopping.

They are related, and perhaps even two sides of the same coin, but one is banned and the other is not - not abroad, and at least to my knowledge also not in China. Of course such setup is ideal growing ground for suspicious activies like forced shopping.

Use magic tools Report

Rank: 6Rank: 6

Post time 2017-10-25 00:19:36 |Display all floors
Jaaja Post time: 2017-10-24 19:44
But technically I wasn't referring to same thing. On one hand you have tour guides making arrang ...

Here's a news item on the Chinese law banning "forced shopping" in tour groups;

The new law decrees that "travel agencies shall not arrange tours and attract tourists by unreasonably low prices".

Agencies and tour guides are prohibited from arranging for tourists to visit specific shops, or organising other activities that tourists have to pay for on top of the tour fee.
So no visits to shops means no "forced shopping" which means no kickbacks.

Use magic tools Report

You can't reply post until you log in Log in | register

BACK TO THE TOP
Contact us:Tel: (86)010-84883548, Email: blog@chinadaily.com.cn
Blog announcement:| We reserve the right, and you authorize us, to use content, including words, photos and videos, which you provide to our blog
platform, for non-profit purposes on China Daily media, comprising newspaper, website, iPad and other social media accounts.