China
Currency internationalisation in Asia
Author: Gregory Chin, York University and CIGI
Without political fanfare, China took two more steps in internationalising its currency in early December 2012.
On 4 December, trading giants South Korea and China agreed to use their currency swap, valued at US$59 billion, to boost bilateral trade using the yuan and the won. On 12 December, Chinese central bank authorities awarded the Bank of China’s Tapei branch the role of clearing bank for yuan transactions in Taiwan. In turn, the Bank of Taiwan’s Shanghai branch will clear transactions on the Chinese mainland. Although market fundamentals will ultimately determine the viability and sustainability of the renminbi as an international currency, these agreements highlight that politics matter.
Politics also features in holding up another dimension of Chinese currency internationalisation: with Japan. On Christmas Day a year ago, China and Japan signed the agreement for ‘Enhanced Cooperation for Financial Markets Development between Japan and China’. It included wide-ranging currency cooperation arrangements to promote the use of their currencies for trade and investment. Both countries wanted to reduce costs and risks for their companies — and implicitly called for less reliance on the US dollar, currently their predominant medium of exchange. Japanese authorities also confirmed a plan to buy the equivalent of US$10 billion in Chinese government bonds, marking the first time they added renminbi-denominated assets to Japan’s official reserve holdings.
The significance of the pact lies in the fact that together, China and Japan hold the world’s largest foreign-currency reserves, with China holding about US$3.2 trillion and Japan US$1.3 trillion at the time of the agreement in December 2011. Any moves to reshuffle those holdings would change the global currency map.
During the first half of 2012, the Joint Working Group for Development of Japan–China Financial Markets, established to flesh out the details of the bilateral agreement, made significant progress. By June 2012, direct trading of the yen–yuan commenced on the Shanghai and Tokyo exchanges.
Recent visits by the author to Tokyo and Hong Kong in December 2012 have highlighted that one of the overlooked casualties of the ongoing island dispute between China and Japan is their currency pact. Further implementation of the agreement has stalled. The Working Group has stopped meeting due to the political fallout. The offer from the Japan Bank for International Cooperation to sell an undisclosed amount of renminbi-denominated bonds on mainland markets remains in limbo, awaiting formal Chinese approval — after being listed as a pilot program in the agreement signed on 25 December 2011.
The amount of Sino–Japanese trade that is settled in yuan and yen remains low; nearly 60 per cent of China–Japan trade continues to be settled in US dollars. Given the continuing importance of the United States as an end market, and other forces of habit that produce inertia, Japanese traders remain reluctant to accept renminbi for their exports to China, and continue to prefer the US dollar as the settlement currency of choice. Conversely, Japanese companies continue to convert their yen into US dollars when buying from China. The business incentive to convert to yen–yuan settlement also appears lacking, especially for the large Japanese trading companies, as the cost of settling in US dollars remains low.
Yet, coming out of the 2007–09 global financial crisis, central banks and finance ministry officials in Beijing and Tokyo declared a desire to promote diversification in international currencies. More recently, they have been joined by some of their neighbours in the region, namely Malaysia and South Korea, which are also taking initial steps to promote the use of their national currencies internationally. But the territorial dispute between China and Japan has diverted attention from currency cooperation.
If promoting international currency diversification remains a priority, then both sides ought to embrace their recent leadership changes as an opportunity to hit the reset button. More broadly, in the interests of international stability and cooperation, both sides need to put the crucial China–Japan relationship on more solid footing. Beijing’s offer of ‘joint development’ of the resources around the disputed islands is a positive step.
At the same time, newly returned Japanese prime minister Shinzo Abe should remind the public that Japan’s recovery during the past decade has been intimately tied to surging trade and investment ties with China.
Regarding currency cooperation efforts, Japanese finance officials offered two related suggestions during the recent research discussions in Tokyo. First, they reiterated that recent leadership changes in Beijing and Tokyo, and further imminent changes on the Chinese side, present an opportunity for both sides to adjust and re-establish relations and to reduce tensions.
Abe may have initiated this shift by offering reassuring statements at his first press briefing after election day, when he told a Chinese Xinhua reporter that Japan–China relations are ‘one of the most important bilateral relationships’ and he pledged to improve bilateral relations. He further emphasised that China is an indispensable country for the Japanese economy to keep growing, and noted that ‘we need to use some wisdom so that political problems will not develop and affect economic issues’.
Second, Japanese finance officials noted rather hopefully that Japan and South Korea also experienced territorial disputes in the past — but that once the disagreements were dealt with, it did not take very long before finance ministry representatives from both sides resumed their talks, picking up where they left off. The same might be said for the resumption of the China–Japan Joint Working Group.
Gregory Chin is Associate Professor at York University, Canada, and China Research Chair at The Centre for International Governance Innovation.
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Currency internationalisation in Asia
China
China’s GDP Grows 5% in 2024: Key Insights and Main Factors
In 2024, China’s GDP grew by 5.0%, meeting its annual target. The fourth quarter saw a 5.4% increase, driven by exports and stimulus measures. The secondary industry grew 5.3%, while the tertiary increased by 5.0%, totaling RMB 134.91 trillion.
China’s GDP grew by 5.0 percent in in 2024, meeting the government’s annual economic target set at the beginning of the year. Fourth-quarter GDP exceeded expectations, rising by 5.4 percent, driven by exports and a flurry of stimulus measures. This article provides a brief overview of the key statistics and the main drivers behind this growth.
According to official data released by the National Bureau of Statistics (NBS) on January 17, 2025, China’s GDP reached RMB 134.91 trillion (US$18.80 trillion) in 2024, reflecting a 5.0 percent year-on-year growth at constant prices. During the 2024 Two Sessions, the government set the 2024 GDP growth target of “around 5 percent”.
By sector, the secondary industry expanded by 5.3 percent year-on-year to RMB 49.21 trillion (US$6.85 trillion), the fastest among the three sectors, while the tertiary industry grew by 5.0 percent, reaching RMB 76.56 trillion (US$10.63 trillion) and the primary industry contributed RMB 9.14 trillion (US$1.31 trillion), growing 3.5 percent.
A more detailed analysis of China’s economic performance in 2024 will be provided later.
(1USD = 7.1785 RMB)
| This article was first published by China Briefing , which is produced by Dezan Shira & Associates. The firm assists foreign investors throughout Asia from offices across the world, including in in China, Hong Kong, Vietnam, Singapore, and India . Readers may write to info@dezshira.com for more support. |
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China
Can science be both open and secure? Nations grapple with tightening research security as China’s dominance grows
The U.S.-China science agreement renewal narrows collaboration scopes amid security concerns, highlighting tensions. Nations fear espionage, hindering vital international partnerships essential for scientific progress. Openness risks declining.
Amid heightened tensions between the United States and China, the two countries signed a bilateral science and technology agreement on Dec. 13, 2024. The event was billed as a “renewal” of a 45-year-old pact to encourage cooperation, but that may be misleading.
The revised agreement drastically narrows the scope of the original agreement, limits the topics allowed to be jointly studied, closes opportunities for collaboration and inserts a new dispute resolution mechanism.
This shift is in line with growing global concern about research security. Governments are worried about international rivals gaining military or trade advantages or security secrets via cross-border scientific collaborations.
The European Union, Canada, Japan and the United States unveiled sweeping new measures within months of each other to protect sensitive research from foreign interference. But there’s a catch: Too much security could strangle the international collaboration that drives scientific progress.
As a policy analyst and public affairs professor, I research international collaboration in science and technology and its implications for public and foreign policy. I have tracked the increasingly close relationship in science and technology between the U.S. and China. The relationship evolved from one of knowledge transfer to genuine collaboration and competition.
Now, as security provisions change this formerly open relationship, a crucial question emerges: Can nations tighten research security without undermining the very openness that makes science work?
Chinese Premier Deng Xiaoping and American President Jimmy Carter sign the original agreement on cooperation in science and technology in 1979.
Dirck Halstead/Hulton Archive via Getty Images
China’s ascent changes the global landscape
China’s rise in scientific publishing marks a dramatic shift in global research. In 1980, Chinese authors produced less than 2% of research articles included in the Web of Science, a curated database of scholarly output. By my count, they claimed 25% of Web of Science articles by 2023, overtaking the United States and ending its 75-year reign at the top, which had begun in 1948 when it surpassed the United Kingdom.
In 1980, China had no patented inventions. By 2022, Chinese companies led in U.S. patents issued to foreign companies, receiving 40,000 patents compared with fewer than 2,000 for U.K. companies. In the many advanced fields of science and technology, China is at the world frontier, if not in the lead.
Since 2013, China has been the top collaborator in science with the United States. Thousands of Chinese students and scholars have conducted joint research with U.S. counterparts.
Most American policymakers who championed the signing of the 1979 bilateral agreement thought science would liberalize China. Instead, China has used technology to shore up autocratic controls and to build a strong military with an eye toward regional power and global influence.
Leadership in science and technology wins wars and builds successful economies. China’s growing strength, backed by a state-controlled government, is shifting global power. Unlike open societies where research is public and shared, China often keeps its researchers’ work secret while also taking Western technology through hacking, forced technology transfers and industrial espionage. These practices are why many governments are now implementing strict security measures.
Nations respond
The FBI claims China has stolen sensitive technologies and research data to build up its defense capabilities. The China Initiative under the Trump administration sought to root out thieves and spies. The Biden administration did not let up the pressure. The 2022 Chips and Science Act requires the National Science Foundation to establish SECURE – a center to aid universities and small businesses in helping the research community make security-informed decisions. I am working with SECURE to evaluate the effectiveness of its mission.
Other advanced nations are on alert, too. The European Union is advising member states to boost security measures. Japan joined the United States in unveiling sweeping new measures to protect sensitive research from foreign interference and exploitation. European nations increasingly talk about technological sovereignty as a way to protect against exploitation by China. Similarly, Asian nations are wary of China’s intentions when it seeks to cooperate.
Australia has been especially vocal about the threat posed by China’s rise, but others, too, have issued warnings. The Netherlands issued a policy for secure international collaboration. Sweden raised the alarm after a study showed how spies had exploited its universities.
Canada has created the Research Security Centre for public safety and, like the U.S., has established regionally dispersed advisers to provide direct support to universities and researchers. Canada now requires mandatory risk assessment for research partnerships involving sensitive technologies. Similar approaches are underway in Australia and the U.K.
Germany’s 2023 provisions establish compliance units and ethics committees to oversee security-relevant research. They are tasked with advising researchers, mediating disputes and evaluating the ethical and security implications of research projects. The committees emphasize implementing safeguards, controlling access to sensitive data and assessing potential misuse.
Japan’s 2021 policy requires researchers to disclose and regularly update information regarding their affiliations, funding sources – both domestic and international – and potential conflicts of interest. A cross-ministerial R&D management system is unrolling seminars and briefings to educate researchers and institutions on emerging risks and best practices for maintaining research security.
The Organisation for Economic Co-operation and Development keeps a running database with more than 206 research security policy statements issued since 2022.
Emmanuelle Charpentier, left, from France, and Jennifer Doudna, from the U.S., shared the Nobel Prize in chemistry in 2020 for their joint research.
Miguel RiopaI/AFP via Getty Images
Openness waning
Emphasis on security can strangle the international collaboration that drives scientific progress. As much as 25% of all U.S. scientific articles result from international collaboration. Evidence shows that international engagement and openness produce higher-impact research. The most elite scientists work across national borders.
Even more critically, science depends on the free flow of ideas and talent across borders. After the Cold War, scientific advancement accelerated as borders opened. While national research output remained flat in recent years, international collaborations showed significant growth, revealing science’s increasingly global nature.
The challenge for research institutions will be implementing these new requirements without creating a climate of suspicion or isolation. Retrenchment to national borders could slow progress. Some degree of risk is inherent in scientific openness, but we may be coming to the end of a global, collaborative era in science.
This article is republished from The Conversation under a Creative Commons license. Read the original article.
China
China Lures Indonesia to Ease Its Position on the South China Sea
A China–Indonesia statement on “joint development in overlapping claims” marks a shift in Indonesia’s stance on the Natuna Islands, influenced by China’s economic diplomacy and domestic needs, impacting regional dynamics.
Shift in Indonesia’s Maritime Position
A recent China-Indonesia joint statement advocating for "joint development in areas of overlapping claims" marks a significant departure from Indonesia’s historical claim over its Exclusive Economic Zone (EEZ) near the Natuna Islands. This change reflects Chinese diplomatic efforts, domestic economic pressures, and challenges within Indonesia’s presidential advisory system, pointing to broader implications for Southeast Asian nations as they navigate regional dynamics.
President Prabowo’s State Visit
During President Prabowo Subianto’s state visit to China in November 2024, Indonesia seemingly recognized the validity of Chinese territorial claims in maritime areas, particularly where China’s nine-dash line intersects with its EEZ. While the joint statement from the visit is not legally binding, it represents a notable shift from Indonesia’s traditional opposition to Chinese claims, which it previously argued were inconsistent with the United Nations Convention on the Law of the Sea.
Economic Incentives at Play
China’s appeal to Indonesia’s domestic economic priorities played a crucial role in this rapprochement. The joint statement included commitments from China regarding fisheries cooperation and significant investments, including US$10 billion across various sectors. Additionally, China pledged support for initiatives like a free lunch program for schoolchildren and affordable housing projects, highlighting how economic incentives can influence geopolitical stances in the South China Sea.
Source : China baits Indonesia to soften South China Sea stance
- China’s GDP Grows 5% in 2024: Key Insights and Main Factors
- Can science be both open and secure? Nations grapple with tightening research security as China’s dominance grows
- China Lures Indonesia to Ease Its Position on the South China Sea
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