On the rationale and implications of China’s RMB internationalization: A global historical perspective

Abstract

AbstractThis article addresses two interrelated questions pertaining to the Communist Party of China’s (CPC) attempt to internationalize the Chinese currency – the renminbi (RMB). First, what is the historical rationale of RMB internationalization, and what are its implications? Second, how does the rationale for, and implications of, RMB internationalization distinguish this process from the emergence of the US dollar as the global reserve currency? The article proceeds by framing the RMB internationalization process as a historical palimpsest that emerges from three critical moments following the establishment of the People’s Republic of China in 1949. It then assesses their collective global historical significance through a comparison with the rationale and effects of dollar internationalization. Through foregrounding the domestic and global path-dependence of the RMB’s historical evolution, the article argues that RMB internationalization does not constitute a rupture in global historical terms by challenging the dollar’s global reserve currency status; rather, it paradoxically consolidates a dollar-centric global monetary system because the CPC is committed to sustaining the Mao-era (1949-76) legacy of absolute macroeconomic control.