One Currency, Two Markets: China’s Attempt to Internationalize the Renminbi - A Book Launch

On November 23, the Center for Economic Policy and HKUST Institute for Emerging Market Studies (IEMS) jointly organized a book launch event for the new book “One Currency, Two Markets: China’s Attempt to Internationalize the Renminbi” (Cambridge University Press, September 2021) authored by Professor Edwin Lai, Professor of Department of Economics and Associate Director of Center for Economic Policy at HKUST. The book launch started with brief remarks by the moderator Professor Albert Park, the director of the Center for Economic Policy. Professor Edwin Lai introduced his new book chapter by chapter, followed by comments on the book given by the discussant Professor Leonard Cheng, President and Chair Professor of Economics at Lingnan University of Hong Kong. 

Professor Edwin Lai explained six main ideas in the book, including the reason for internationalizing the RMB, China’s strategy of internationalizing the RMB, the importance of capital account liberalization, the importance of financial sector liberalization, the importance of the offshore RMB market, and the prospects of RMB internationalization. Professor Leonard Cheng listed some features of the book and commented on different chapters, supported by some observations such as paying attention to national financial security and the phenomenon of fire sale in and after global financial crisis. Lastly, he shared his thoughts on the future international monetary system.

The presentation slides are available here.

About the event 

The event is co-organised with HKUST Institute for Emerging Market Studies (IEMS).

Synopsis

In One Currency, Two Markets: China’s Attempt to Internationalize the Renminbi, Professor Edwin Lai of HKUST analyses of the future of the international monetary system and the USD, and the rising importance of the RMB. He highlights the reasons for the unsustainability of the dollar standard in the long run, that China has unique incentives to internationalize its currency, and how Hong Kong could play an important role. He explains the real reasons for China to internationalize its currency, including using external commitments to force financial sector reforms domestically. He uses economic concepts, in language accessible to laymen, to argue that financial development and openness are crucial for RMB internationalization to succeed, and that greater exchange rate volatility is inevitable due to the “open-economy trilemma”. Employing the “gravity model,” the book also predicts that by 2030, the RMB would be a distant third payment currency after the USD and the euro but surpassing British pound sterling. 

Read HKUST IEMS Thought Leadership Briefs No. 58 to explore more about the book. 

About the author 

Edwin L. C. Lai is Professor of Economics at HKUST. He has been Senior Research Economist and Adviser at the Federal Reserve Bank of Dallas, a consultant with the World Bank, and a visiting fellow at Princeton University. He is an associate editor of Review of International Economics and has published numerous papers in leading economics journals. 

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About the discussant

Leonard K Cheng became President of Lingnan University of Hong Kong in September 2013. Prior to joining Lingnan University, he served as Dean of the School of Business and Management of the Hong Kong University of Science and Technology (HKUST Business School) from 2009 to 2013. Professor Cheng’s research interests include applied game theory, market structure, currency crisis, international trade and investment, technological innovation and imitation, and China’s inward and outward foreign direct investment. He has published papers in many leading academic journals in economics, and has served as an associate editor of the Journal of International Economics and Pacific Economic Review.   

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About the moderator

Albert Park is a development and labor economist who is an expert on China’s economic development. He is Director of the Center for Economic Policy, Head and Chair Professor of Economics, Chair Professor of Social Science, Professor of Public Policy, and Director of the Center for Economic Policy at HKUST. His research and commentary has appeared in the Economist, New York Times, Washington Post, Wall Street Journal, China Daily, BBC, CNN, NBC, Bloomberg, Freakonomics, and NPR.

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