In 2012, that figure rose to 22%. By 2017, Western firms expect Asia to contribute 32%. However, this will still be below Asia’s estimated 35% share of the global economy in 2017.” 5. The use of RMB is now catching up with China’s rising economic clout. Starting from scratch in 2009, the portion of China’s trade settled in the RMB quickly surged to 20% in 2014, amounting to 6.6 trillian yuan, equivalent to more than $ trillion. And, in the same year, over 30% and 16% of China’s inward and outward direct investment respectively were denominated in the RMB. Increasingly, MNCs will find it advantageous and necessary to trade with their Asian counterparts, and to conduct the related financing, investment and hedging activities in the RMB. 6. In parallel, riding on her rapid economic growth in the past decades, Mainland China now has a growing cluster of home grown MNCs in a wide range of sectors. Chinese companies now account for 95 of the Fortune 500 companies. These MNCs are now flexing their muscles in the international arena, typically starting with trade and eventually venturing into mergers and acquisitions and global portfolio investment. We can safely assume that they will take even bolder steps with the supportive policies under the “One Belt, One Road” strategy, bringing new business and business partners for other global MNCs. 7. These favourable macro trends are indeed good news to the corporate treasurers.
Nevertheless, such reflection does provide an opportunity for a realistic assessment of the prospects and challenges that lie ahead for the RMB. There are at least 5 key factors. Let me list them without going into the details. •  Currencies that rise to dominance are often of countries that are dominant in global trade. •  Currencies often become internationalised because the country is a key global exporter of capital. •  Every successful currency had official support. •  Currencies can only rise to international prominence when backed by liberalised and developed markets. •  There needs to be confidence in the currency and the economy. How does China fare against these signposts? I would say that it is three out of five. As far as trade dominance is concerned, China surpassed the US economy as the largest goods trading nation in 2013. The internationalisation of the currency, despite its cautious nature, is certainly getting a lot of official support – not just from Chinese policymakers but also from policymakers in other countries. As for confidence in the currency and the economy, there would not be so much enthusiasm for RMB internationalisation were such confidence missing. The fact that countries are queuing up to be able to trade RMB within their borders, or to gain access to China’s domestic financial markets, shows a strong desire on the part of these countries to participate in what they see as an economy with a potential for continued strong growth.