Page numbers refer to the print edition but are hyperlinked to the appropriate location in the e-book.
aggregate liquidity,
211n2anti-American sentiment,
182–85appreciation: Bretton Woods and,
18–19; in global financial crisis,
23; of renminbi,
75,
78–80,
90–91,
94,
129,
148–49,
164–68,
178,
197n49; of yen,
75,
105–6Asian Development Bank (ADB),
190Asian Infrastructure Investment Bank (AIIB),
46,
123,
189–90Association of Southeast Asian Nations (ASEAN),
110,
112,
122,
140
Bank for International Settlements,
99Bank of China,
110,
124,
128,
140,
145,
200n22; financial repression and,
57,
61,
63; as policy bank,
63Bank of Communications,
59banks: bonds and,
62–63; clearing,
124–25,
139; deposit rates of,
52,
162–63; in financial repression system,
56–64; interbank liquidity and,
221n20; interbank market of,
63; interbank rate of,
162; overseas investment in,
45; policy,
63; private-sector depositors in,
58–59; reform,
130,
157–60,
173,
201n32; savings of,
64–65; shadow banking and,
49–50,
61,
64–67; state,
60–61,
186,
201n32; state-owned enterprises and,
53,
60–61,
160,
201n32; stock market and,
62; trade settlement pilot scheme and,
110–11
capital account: global financial crisis and,
80–81; internationalization and,
102–4,
154,
170; opening of,
135,
151–58,
165–70,
185,
187; restrictions on,
80–83,
89–90,
135Capital in the Twenty-First Century (Piketty),
10
Central Bank of Brazil,
99China: ambitions of,
177–80; Cultural Revolution in,
30; debt in,
64,
66–67; dollar relied on by,
2,
5–6,
25–27,
31–33,
75–80,
86–88,
93–95,
100,
118,
146; foreign direct investment in,
36–39,
129,
131,
196n30; foreign exchange reserves and,
92–95,
146,
176,
184–85,
206n12; GDP of,
29–31,
33,
52,
62,
66,
206n18; without international currency,
69–71; invoicing gap,
149–50; market intervention by,
75,
83,
165,
186; Ministry of Commerce,
81; Ministry of Finance,
130; pivotal moment of,
1–2; reforms in,
1,
5,
31–33,
37,
57–58,
73,
152,
154–59,
173–74,
203n8,
219n34; reserve currency and,
15,
69; savings in,
49–50,
52,
64–67,
81,
156; Securities Regulatory Commission,
1; socialism in,
4,
32,
159–60,
195n12,
221n18; sub-prime investments in,
67; superpowers and,
2,
188; trade surplus of,
75–76,
80,
88,
90–93; U.S. trade deficit with,
25; in WTO,
33,
38,
59,
74,
77,
103,
154,
157,
159.
See also renminbi;
transformation, of ChinaChina Foreign Exchange Trade System,
125coastal development,
32–33convertibility: managed,
7,
155,
168–71; offshore market and,
116; of renminbi,
7,
69,
80–83,
112–14,
116,
138,
153–57,
168–73Cross-Border Inter-bank Payment System (CIPS),
125–26“crossing the river by feeling the stones,”
100,
106–8currency: defined,
12; immature,
88–90; importance of,
2–3,
177; regional,
6–7,
147–48,
174,
176–77,
179,
189–90; reserve,
15–17,
69; supranational,
88,
181,
187; swaps,
121–24,
212n11.
See also dwarf currency;
international currency;
reserve currencycurrent account,
80,
102–3,
117–18; deficit,
18–19,
25,
193n22,
194n35; surplus,
19,
25,
75–76,
193n22,
194n36
Decline of Sterling, The (Schenk),
71
Deng Xiaoping,
100,
106,
133,
196nn37–38; expectations of,
31; reforms by,
1,
5,
31–32,
37,
57,
158–59,
203n8,
219n34; Southern Tour of,
37; trade liberalization strategy of,
73Development and Reform Committee,
82development model, Chinese,
69dollar, U.S.: China relying on,
2,
5–6,
25–27,
31–33,
75–80,
86–88,
93–95,
100,
118,
146; in China’s transformation,
25–27,
31–33,
37; costs of doing business in,
86–88; development of,
5; dominance of,
17–20,
27,
71,
179–82,
187,
189; global financial crisis and,
99; golden era of,
188; hegemony of,
4; as international currency,
14,
17–20,
85,
99,
223n8; liquidity of,
12–13,
18–20,
87–88,
119; national identity in,
2–3; pegging to,
75–80,
164; preference for,
97; renminbi fighting against,
178–85,
190; SDRs of,
17; “strong dollar” policy,
105–6,
167; trap,
93–95,
118; Yen-Dollar Committee and,
102domestic credit risk,
89–90domestic interest rates, international levels aligned with,
166dwarf currency: absorption of trade surplus and,
90–93; challenge to changing,
96–98; dollar trap and,
93–95; downsides of,
6,
32,
86–96,
100; end of,
138; exchange rate and,
6,
71; living with,
85–98; sterilization and,
91–94,
96
euro,
183; as international currency,
14,
85,
187; pegging to,
75; SDRs of,
17exchange rate: black market and,
72–73,
203n8; CNY and CNH,
149,
165; dwarf currency and,
6,
71; floating,
75–77,
166–68; foreign exchange reserves stabilizing,
92; internationalization and,
157; managed,
67,
69,
71–80,
90,
118,
156,
164–68,
185; mismatches,
89; offshore market and,
165,
210n28; PBoC and,
78–79,
91–92,
118,
155,
164–68; Plaza Accord of 1985 and,
105; reform,
73–74,
77,
107,
164–68; renminbi,
26,
67,
69,
71–81,
90,
118,
156,
164–68,
185; reserve currency and,
16; risk,
90; sterilization and,
79; trade and,
72–74; in transformation of China,
69; variability,
14Export-Import Bank of China,
45–46,
63exports, of foreign-invested firms,
38–39external debt, management of,
169
Federal Reserve, U.S.: pegging and,
75; policy,
20,
22–24,
27,
75,
120,
189,
193n26,
209n17financial infrastructure,
104–5financial liberalization,
9–10; cheap money and,
21; financial repression and,
58–59financial repression system: banking sector in,
56–64; consequences of,
52–53,
71,
156,
161; defined,
50–51; financial liberalization and,
58–59; interest rates in,
51–53,
161,
199n5; introduction to,
5,
49–51; lending quotas in,
51–53; misallocated resources in,
51,
61,
161,
220n9; shadow banking in,
49–50,
61,
64–67; state-owned enterprises in,
53–56; in transformation of China,
49; yen and,
101financial sector: international currency and,
9,
14; managed convertibility opening up,
7; real economy served by,
155; reform,
157–58,
161–64,
173foreign credit risk,
89–90foreign exchange: data,
191n3; intervention,
91; market,
10,
13,
74–75,
134,
140–41; reference rates,
13; reserves,
11,
92–95,
146,
176,
184–85,
206n12; SAFE and,
81–82
global financial crisis: appreciation in,
23; cheap money and,
21–23; dollar and,
99; liquidity and,
87–88,
181; pegging during,
77; restricted capital account and,
80–81; Swiss franc and,
16–17; in U.S.,
15,
21–23,
27,
80–81,
167; world economy and,
4,
167globalization: financial,
9–12,
24–25; restricted,
2,
7“global saving glut” hypothesis,
22–23government: international standards of,
186; market intervention by,
75,
83,
165,
186,
206n11; reduced role of,
2; state-owned companies influenced by,
45,
53–56,
197n49gross domestic product (GDP): Chinese,
29–31,
33,
52,
62,
66,
206n18; Spanish,
21; trade and,
33; U.S.,
20–21,
62,
206n18; Zambian,
85
high value payment system (HVPS),
124,
213n19Hong Kong: internationalization and,
108–11,
115,
122–25,
127–28,
131–35,
137,
170–71; invoicing gap,
149–50; Occupy,
131,
133; offshore market of,
115,
122–25,
127–28,
131–33,
137–39,
148–49,
175–76,
212n5; payment system in,
124–25; R–QFII in,
131; Shanghai–Hong Kong Stock Connect and,
131–32,
152; two systems in,
132–35Hong Kong Stock Exchange,
131,
152
imports: commodities,
35,
97; pricing,
72Industrial and Commercial Bank of China (ICBC),
56–57,
61,
66,
140Industrial Revolution,
36informal renminbi exchange markets,
109–10Inter-American Development Bank,
123interest rates: domestic, international levels aligned with,
166; in financial repression system,
51–53,
161,
199n5; internationalization and,
157,
160–64; reform,
161–64; U.S.,
22–24,
26,
94,
167,
188–89.
See also low interest ratesinternational currency: China lacking,
69–71; dollar as,
14,
17–20,
85,
99,
223n8; euro as,
14,
85,
187; features of,
12–15,
166,
202n1; financial sector and,
9,
14; as means of exchange,
175; pound as,
14,
70,
85; renminbi as,
2–5,
138,
154,
157,
166,
173–75,
187–88; reserve currency,
15–17; stability of,
166,
180; store of value of,
175–76; as unit of account,
175; yen as,
14,
101–3,
146,
187,
207n6internationalization, of renminbi: ambitions for,
177–80; assessment of,
146–50; banking reform and,
130,
157–60; capital account and,
102–4,
154,
170; challenges of,
96–98,
117–18; constraints on,
27,
51,
67; as “crossing the river by feeling the stones,”
100,
106–8; deadline for,
154; domestic financial stability during,
118,
215n42; exchange rate and,
157; financial globalization and,
24; financial reform and,
157–58,
161–64,
173; free market zone and,
150–52; Hong Kong and,
108–11,
115,
122–25,
127–28,
131–35,
137,
170–71; interest rates and,
157,
160–64; introduction to,
2–7; lessons for,
104–6; market built for,
117–30; offshore market in,
108,
114–16,
139; pace of,
185,
187–88; PBoC and,
107,
112,
120–21,
124–25,
127,
145,
148–49; strategy,
100–117,
137,
146–50,
155,
170–71,
179–80; trade settlement pilot scheme,
107–16,
137,
147,
149,
209n25,
210n31,
211n41; as transformation’s key,
173; yen as example for,
101–6,
207n6
lending: bilateral,
123,
196n30; interest rate reform for,
162–63; nonperforming,
60,
67; patterns, of immature creditors,
89; to private sector,
61,
67; quotas,
51–53; in renminbi,
120,
127liquidity: aggregate,
211n2; in Bretton Woods system,
18; currency swaps and,
121–24; dollar,
12–13,
18–20,
87–88,
119; global financial crisis and,
87–88,
181; interbank,
221n20; market infrastructure and,
118–19; PBoC and,
120–22,
187; renminbi,
114,
118–24,
133,
135,
148,
150; reserve requirement influencing,
161–62; sterilization and,
167; supply for,
119–24; trust and,
192n11long-term investments,
22,
82lost decade, Japanese,
103
market: black,
72–73,
203n8; debt,
127–30; eurodollar,
142,
211n3; foreign exchange,
10,
13,
74–75,
134,
140–41; free market zone,
150–52,
171; informal renminbi exchange,
109–10; infrastructure,
118–19,
124–26; interbank,
63; mortgage,
15,
21–22; panda,
127; stock,
50,
62,
126.
See also offshore marketMartin, William McChesney,
193n30means of exchange, international currency as,
175Ministry of Commerce, China’s,
81Ministry of Finance, China’s,
130money: availability of,
12–13; cheap,
12–13,
21–24; fiat,
13,
117; as game changer,
9–12; “hot money” flows,
149; information technology influencing,
10; laundering,
169; terrorism and,
169; for trade and finance,
12–15; value maintained by,
13.
See also cheap money;
currency;
international monetary systemmortgage market, sub-prime,
15,
21–22multinational companies,
38
national champions, of state-owned enterprises,
40,
200n16National Development Reform Council (NDRC),
81net international lending, in renminbi,
120New Development Bank,
46,
123nonperforming loans,
60,
67
offshore fully convertible renminbi.
See CNHoffshore market: clearing banks in,
124–25,
139; convertibility and,
116; debt market,
127–30; dim sum,
127–30; exchange rate and,
165,
210n28; expanding,
139–41; free market zone and,
150–52; goal of,
116; Hong Kong,
115,
122–25,
127–28,
131–33,
137–39,
148–49,
175–76,
212n5; in internationalization of renminbi,
108,
114–16,
139; London,
142–44,
177; payment system,
124–26,
183; pure,
119–20,
133,
139; quotas,
131–32; for renminbi-denominated bonds,
126–29; renminbi supplied to,
119–21; Singapore,
140–41,
148; store of value and,
175–76; Taipei,
139–41,
148; Tokyo,
102; U.S. and,
144–45,
177One Belt, One Road Initiative,
46,
147onshore nonconvertible renminbi.
See CNYOrganization of the Petroleum Exporting Countries (OPEC),
182–83
People’s Bank of China (PBoC),
52,
56–58,
66,
175; development plan of,
153; exchange rate and,
78–79,
91–92,
118,
155,
164–68; interest rate reform and,
161–63; internationalization of renminbi and,
107,
112,
120–21,
124–25,
127,
145,
148–49; liabilities of,
87; limitations of,
186; liquidity and,
120–22,
187; one-year bills of,
94; reserve requirement and,
161–62; Zhou Xiaochuan governing,
83,
88,
95,
99,
107,
155,
157,
168–69,
180–81,
185,
187Plaza Accord of 1985,
105pound sterling: dominance of,
70–71; golden era of,
188; gold standard and,
20,
70; as international currency,
14,
70,
85; as reserve currency,
15,
70price-based instruments,
161private property rights,
159private sector: depositors,
58–59; lending to,
61,
67; role of,
1–2; shadow banking in,
61
QDII (qualified domestic institutional investors),
82–83,
205n30QDLP (qualified domestic limited partnership),
131QFII (qualified foreign institutional investors),
82–83,
130,
147qualified domestic institutional investors.
See QDIIqualified domestic limited partnership.
See QDLPqualified foreign institutional investors.
See QFIIquantity-based instruments,
161–62
real economy, financial sector serving,
155reforms: accelerated,
5; banking,
130,
157–60,
173,
201n32; in China,
1,
5,
31–33,
37,
57–58,
73,
152,
154–59,
173–74,
203n8,
219n34; by Deng,
1,
5,
31–32,
37,
57,
158–59,
203n8,
219n34; exchange rate,
73–74,
77,
107,
164–68; financial,
157–58,
161–64,
173; importance of,
173–74; interest rate,
161–64; managed convertibility,
7; way forward for,
152,
187–88renminbi: age of,
190; appreciation of,
75,
78–80,
90–91,
94,
129,
148–49,
164–68,
178,
197n49; artificial overvaluation of,
72–73; bonds in,
94,
126–29,
143–44; in Britain,
142–44,
177,
217n13; CNH,
115,
124,
148–49,
165; CNY,
115,
148–49,
165; confidence in,
4,
118,
192n11; convertibility of,
7,
69,
80–83,
112–14,
116,
138,
153–57,
168–73; credibility of,
117–18; depreciation of,
78,
92,
94,
113,
156,
164–65,
167,
168; devaluation of,
73–74,
156,
222nn26–27; domain of,
175–77; downward trend of,
1; exchange rate,
26,
67,
69,
71–81,
90,
118,
156,
164–68,
185; in fight against dollar,
178–85,
190; flows, management of,
130–32; as immature currency,
88–90; informal exchange markets for,
109–10; as international currency,
2–5,
138,
154,
157,
166,
173–75,
187–88; international monetary system and,
186–88; international use of,
6–7,
146; lending in,
120,
127; liabilities,
87,
223n11; liquidity,
114,
118–24,
133,
135,
148,
150; movement of,
137–52; nationalism and,
177–79; origin of,
30,
194n5; pegging of,
74–80,
107,
164; as regional currency,
6–7,
147–48,
174,
176–77,
179,
189–90; in restricted globalization,
2; scope of,
175–76; SDRs of,
17,
78,
138,
145,
174,
178–79,
186,
190; supply,
119–24; trajectory of,
187–88; transformation of China and,
31–32; trust in,
4,
192n11; in U.S.,
144–45,
177.
See also dwarf
currency;
internationalization, of renminbirenminbi-foreign direct investment program.
See R–FDIrenminbi-overseas direct investment program.
See R–ODIrenminbi-qualified foreign institutional investor scheme.
See R–QFIIreserve currency: China and,
15,
69; defined,
15–17; exchange rate and,
16; pound as,
15,
70; Swiss franc as,
16–17restricted globalization,
2,
7R–FDI (renminbi-foreign direct investment program),
131R–ODI (renminbi-overseas direct investment program),
130–31R–QFII (renminbi-qualified foreign institutional investor scheme),
130–31
Securities Regulatory Commission, China,
1Shanghai Composite Index,
1,
24Shanghai–Hong Kong Stock Connect,
131–32,
152Shanxi Platinum Assemblage Investment,
49–50Shenzhen Stock Exchange,
215n36Society for Worldwide Interbank Financial Telecommunication (SWIFT),
126,
134Southern Tour, Deng’s,
37South Korea: currency swap with,
122; income per capita,
10–11; won,
122,
141Special Drawing Rights (SDRs): defined,
192n16; of dollar,
17; of euro,
17; free usability and,
177,
224n16; of renminbi,
17,
78,
138,
145,
174,
178–79,
186,
190; of yen,
17special economic zones,
151–52Standing Committee of the State Council,
108State Administration of Foreign Exchange (SAFE),
81–82State-Owned Assets Supervision and Administration,
200n18state-owned enterprises,
200nn18–19; banks and,
53,
60–61,
160,
201n32; in financial repression system,
53–56; government influencing,
45,
53–56,
197n49; national champions,
40,
200n16sterilization,
148; dwarf currency and,
91–94,
96; exchange rate and,
79; liquidity and,
167; loss on,
94store of value, of international currency,
175–76sub-prime investments: in China,
67; mortgage market,
15,
21–22
Tokyo offshore market,
102trade: agreements,
46–47; deficit,
25; exchange rate and,
72–74; GDP and,
33; growth,
10; liberalization,
73; money for,
12–15; surplus,
75–76,
80,
88,
90–93; transformation of China driven by,
32–36trade settlement pilot scheme: banks and,
110–11; goal of,
115–16; internationalization and,
107–16,
137,
147,
149,
209n25,
210n31,
211n41; limited impact of,
113–14Transatlantic Trade and Investment Partnership (TTIP),
47transformation, of China: cheap money in,
27,
29; Chinese investment abroad in,
39–45; coastal development in,
32–33; development finance and,
45–47; development model of,
69; dollar’s role in,
25–27,
31–33,
37; effects of,
33; exchange rate in,
69; financial repression in,
49; foreign direct investment driving,
36–39; history of,
29–32; impact of,
195n18; internationalization as key to,
173; next step of,
173–74; renminbi and,
31–32; trade driving,
32–36Trans-Pacific Partnership (TTP),
46Treasury Department, U.S.,
76–78
United States (U.S.): Congress,
145; credit growth in,
21; current-account deficit of,
19,
25,
194n35; fines,
183; foreign policy,
182–83; GDP,
20–21,
62,
206n18; global financial crisis in,
15,
21–23,
27,
80–81,
167; interest rates in,
22–24,
26,
94,
167,
188–89; offshore market and,
144–45,
177; renminbi in,
144–45,
177; sanctions,
183; service sector in,
35–36; sub-prime mortgage market in,
15,
21–22; trade agreements,
46–47; trade deficit,
25; Treasury bonds,
94–95,
103; Treasury Department,
76–78.
See also dollar, U.S.;
Federal Reserve, U.S.unit of account, international currency as,
175
world economy: changes in,
188; cheap money influencing,
21; global financial crisis and,
4,
167World Trade Organization (WTO): China in,
33,
38,
59,
74,
77,
103,
154,
157,
159; requirements,
154
yen,
207n20,
209n17; appreciation of,
75,
105–6; direct trading of,
141; financial repression and,
101; habits,
98; as international currency,
14,
101–3,
146,
187,
207n6; internationalization and,
101–6,
207n6; SDRs of,
17Yen-Dollar Committee,
102
Zhou Xiaochuan: PBoC governed by,
83,
88,
95,
99,
107,
155,
157,
168–69,
180–81,
185,
187; speeches by,
107,
157,
168–69,
180–81