What is the international destiny of the renminbi (RMB)? Structural realists tend to claim the inevitability of RMB internationalization as a rising power will seek to extend the influence of its currency abroad. The liberal hype presupposes that reform-minded liberals have been in the driver’s seat of RMB internationalization, getting the Chinese economy to integrate into the West-centered liberal monetary order. These views are at best partially correct, but cannot provide complete explanations about the process, nature, and prospect of RMB internationalization.

 

This study argues that the process and nature of RMB internationalization represents political compromise between liberals and conservatives (or neo-mercantilists) in China. This study also identifies key similarities and differences among Germany of the 1930s, the United States of the 1960s, and today’s China in their currency internationalization. This mini-comparison will reveal important structural factors that may contribute to a slow path to full RMB internationalization, and the emergence of the hybrid model of China-centered monetary order in the East Asian region.

 

Injoo Sohn is an associate professor in the Department of Politics and Public Administration at the University of Hong Kong. Trained as a political scientist and specialist on East Asia, Dr. Sohn’s research interests include Asian regional integration, Chinese foreign policy, and global economic governance.