Millions of Chinese traveling in neighboring Asian regions are taking the Chinese Renminbi (RMB) with them, using the currency as a means of payment, as it enjoys a status never credited it before -- a strong currency.
Last year, nearly three million well-off Chinese packed up to travel to places outside China, some as far as western Europe, Australia, Egypt, and the Maldives in South Asia.
Prior to this year's seven-day Spring Festival holiday, when many Chinese chose to travel overseas, stores in the shopping districts of downtown Hong Kong declared they would accept the RMB for payment, hoping it would stimulate the consumption of hundreds of thousands of mainland Chinese tourists arriving in Hong Kong.
Zhang Fan, a clerk who has worked many years in Hong Kong, said most shopping districts in the city now welcome the RMB, and some drug stores even put up a sign saying "One RMB yuan equals one Hong Kong dollar." The official conversion rate for Hong Kong dollar to RMB is about 100:106.
Statistics show that Hong Kong now has a reserve of RMB notes worth more than 50 billion yuan (US$6 billion).
In Vietnam's Ha Tuyen province, which borders southwest China's Yunnan Province, Chinese travelers could use the RMB freely to buy goods like fruits, bottled mineral water and various kinds of souvenirs.
The Myanmar government recently raised its customs duty-free ceiling to 5,000 yuan (US$602), in an attempt to attract more Chinese tourists to visit the country.
Even in economically underdeveloped Mongolia, the RMB is also circulating on markets in the capital Ulan Bator as imports of China-made commodities are rising. In some hotels, the RMB is accepted.
Although an increasing number of Chinese travel abroad, fewer conversion trades have been reported with foreign exchange authorities at home. Usually Chinese going abroad have to buy foreign currencies for use overseas.
In Chongqing, the booming municipality in west China, 40,000 local residents traveled overseas in 2002, but they only bought less than US$500,000 for their trip. In the previous years, some 31,000 local residents traveling overseas bought US$12.4 million in foreign currencies, according to the city foreign exchange administration.
But it was a quite different story in the early 1990s when traveling abroad began to be easier and individuals had a chance to purchase foreign currencies. Most people bought foreign currencies at the exchange administration and tried to save as much the foreign money as possible as inflation protection.
The acceptance of the RMB in neighboring countries and regions means a lift in the currency's credit and its promotion as a strong currency in Asia, indicated officials with the Chongqing office of the State Administration of Foreign Exchange.
Economists also attributed the elevation to growing direct investment by Chinese enterprises in surrounding countries and regions, which helped increase RMB circulation.
Chinese enterprises in areas bordering Southeast Asia have eyed lucrative markets there, and looking beyond merely promoting their products on local markets, they have also invested in building factories in Vietnam, Indonesia and other countries in the region.
Analysts said the Chinese RMB's steadfastness during the financial crisis that swept Asia in 1997, dragging down the world economy, transformed it from a weak currency into a tower of strength in the economic storm.
It is natural that a strong economy would prop up a strong currency, analysts noted.
Last year, China's GDP exceeded 10 trillion yuan (US$1.2 trillion) and its foreign currency reserve reached US$280 billion, ranking second in the world, which will ensure the stability of the RMB.
Experts say that, on the basis of the present growth rate, China's share in the global economy is expected to rise from 3.7 percent in 2000 to 8 percent in 2020, and is likely to become the world's second largest economic power by 2030.
During the financial crisis, China maintained its policy of not devaluating the RMB, and a stable Chinese currency helped the neighboring countries survive the hardship and made room for their exports as their own currencies depreciated sharply.
China's new Premier Wen Jiabao said recently that a strong and stable RMB would benefit Asia and the world at large.
Sun Jie, an economist at the International Finance Center under the Chinese Academy of Social Sciences, said RMB circulation in neighboring countries was the first step to its acceptance globally, but there is still a long road ahead before the RMB becomes one of the world's leading currencies.
Analysts noted that the on-going Iraq war has produced negative effects on China's economy, and the RMB has been under increasing pressure to appreciate.
Gao Huiqing, an expert at the development research department under the State Information Center, warned that once the RMB was forced to appreciate by a big margin, the Chinese economy would suffer much as Japan's did, and fall into recession.
Many economists shared the consensus that keeping the RMB's conversion rate in a comparatively long period of time will be beneficial not only to China's economic growth, but also to other Asian economies.
(Xinhua News Agency March 30, 2003)
