President Xi Jinping will visit the World Economic Forum next week in Davos as the first Chinese head of state. It is part of China´s push for international recognition, but political and financial analyst Victor Shih sees at this stage little room for progress, he tells at the Economic Times.
Victor Shih, a scholar of China’s political economy at the University of California, San Diego, said there are actually some global agenda matters on which China’s influence “might have peaked in the medium term.”
He pointed to China’s push in recent years to have the renminbi counted as an international currency. That has been undermined in the past year by efforts of the Chinese central bank, the People’s Bank of China, to withdraw large quantities of offshore renminbi from circulation. The bank has been doing that in order to try to prop up the value of the renminbi and limit capital flight from China, including the transfer of money to Hong Kong by wealthy Chinese.
“The People’s Bank of China continues to claim that renminbi internationalization is important, and of course, at Davos, President Xi may continue to pay verbal homage to that agenda because it would be an important sign of China’s ascendance on the world stage,” Shih said. “Yet, in the past year, we have seen renminbi deposits outside of mainland China decline by hundreds of billions of renminbi.”
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