One of the reasons for China to drop the value of its currency was to get into line with the IMF requirements to become a global reserve currency. Much of the country´s actions is about prestige, says associate professor Victor Shih at WFDD.
JIM ZARROLI, BYLINE: China is already an economic force, the second-biggest in the world. It’s a powerhouse in trade and manufacturing. But it yearns to be more.
VICTOR SHIH: For the top leadership especially, a main motivation is prestige.
ZARROLI: Victor Shih is an associate professor of political science at the University of California at San Diego. Shih says China wants to be respected in the global financial markets like the United States, Japan and England are. That was behind its efforts earlier this year to set up the so-called Asian Development Bank, which lends money for infrastructure projects. And Shih says China’s decision to let its currency fluctuate a bit more freely this week is another part of its effort to become a financial player.
SHIH: President Xi Jinping has said repeatedly that China is now a major country, on equal footing with the United States. Part of that is to have China’s currency to be a globally accepted reserve currency.
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