China Updated Global Stage

April 27, 2015 | www.bloombergbriefs.
com
Bloomberg Brief
April 27, 2015
CONTRIBUTORS
1
3
Economics Asia
CONTENTS
Tom Orlik is Bloomberg's chief Asia economist, based in Beijing. He

was previously chief China economics correspondent for The Wall
Street Journal, China economist for Stone & McCarthy Research
Associates and a policy analyst at the British Treasury. He is the
author of Understanding China's Economic Indicators.
GETTING INTO THE SDR BASKET

Chances are good that Chinas
currency will be included in the IMFs
new Special Drawing Rights basket in
January.
Page 4.
CHINA ON THE GLOBAL STAGE

Yuan internationalization, the SDR basket, and
the Asian Infrastructure Investment Bank
Tamara Henderson is a Ph.D economist with buy- as well as
sell-side experience, covering G-3 economies and the emerging
markets over a span of 25 years. She has focused on FX and rates
strategy over the past 12 years and has accumulated a strong track
record for her trade ideas. Previously, she was an economist with the
International Monetary Fund. Tamara is a CFA charterholder and the
author of 'Fixed Income Strategy: A Practitioner's Guide to Riding the
Curve,' published by Wiley.
Fielding Chen is an economist for Bloomberg based in Hong Kong.

He was previously a senior economist for Asia at Banco Bilbao
Vizcaya Argentaria. He holds a Ph.D in economics from Georgia
State University and a master's degree in finance from Xiamen
University. Chen is a published author and was an instructor at
Chinese University of Hong Kong Business School.
David Dollar is a senior fellow with the John L. Thornton China

Center at Brookings and an expert on the Chinese economy. From
2009 to 2013, he was the U.S. Treasury Department's economic and
financial emissary to China. Previously, he worked at the World Bank
for more than 20 years, including serving as country director for
China and Mongolia.
CHARTING THE YUAN'S RISE

While use of the yuan in global
transactions continues to rise, barriers
remain to more rapid progress.
Page 5.
YUAN TRADING RULES
Backtesting analysis yields the trading
rules that top returns for the offshore
yuan in the past three years.
Page 7.
LESSONS FROM EXPERIENCE
The AIIB can learn from the
experiences of the World Bank, says
David Dollar.
Page 8.
PAVING THE WAY FOR ASIA
GROWTH
Improving infrastructure and boosting
growth are among the potential
benefits from AIIB investment.
Page 9.
TIMELINE
Bloomberg Economics tracks a
decade of the yuan's major
milestones.
Page 10.
The last decade has seen China rocket up the global economic rankings.
Now its standing in international finance is starting to catch up. The yuan
is emerging as a major international currency. The Asian Infrastructure
Investment Bank shows China flexing its muscles in global governance.
This report brings together recent analysis from Bloomberg Brief on the
causes and consequences of Chinas rise in international finance.
YUAN IN THE SDR BASKET TAMARA HENDERSON, BLOOMBERG ECONOMIST
US Letter print w-bleeds PA .indd 1
4/27/2015 10:21:54 AM
4/27/2015 10:21:54 AM
April 27, 2015
Bloomberg Brief
INTRODUCTION TOM ORLIK, BLOOMBERG ECONOMIST

CONTRIBUTORS
3
2
Economics Asia
CONTENTS

China is riding high
with its leadership
Associates
and a policy analyst
at
the
British
Treasury.
He
is
the
For U.S., Economic Strength CameJanuary.
Before Dollar Dominance
of a new development
author
institution
of Understanding
and
China's Economic Indicators.
Page 4.
enhanced international standing for the
yuan. The hard work is still to come.
The past few weeks have been positive
for China's position in the international
financial system. The Asian Infrastructure
Investment Bank has
Tamara
attracted
Henderson
57
is a Ph.D economist with buy- as well as
Page 5.
prospective founding
sell-side
members.
experience, covering G-3 economies and the emerging
Subscribed capital of
markets
$100 billion
over aspan
if theof 25 years. She has focused on FX and rates
YUAN TRADING RULES
aspiration is achieved
strategy
willover
give the
it a past 12 years and has accumulated a strong track
lending capacity comparable
record forwith
her trade
that ofideas. Previously, she was an economist with the
the Asian Development
International
Bank. Monetary Fund. Tamara is a CFA charterholder and the
author
of 'Fixed
Income Strategy: A Practitioner's Guide to Riding the
At the International
Monetary
Fund's
Page 7.
Curve,' published
by Wiley.
spring meetings in Washington
D.C., the
China's Yuan and AIIB Wins Symbolic, Not Yet Substantive
yuan moved a step closer to reserve

currency status. Managing director
Fielding
Chen
is an economist for Bloomberg based in Hong Kong.
Christine Lagarde said
China's
financial
He was steps"
previously
a senior economist for Asia at Banco Bilbao
reforms were "very positive
toward
Vizcaya
He holds a Ph.D in economics from Georgia
including the currency
in theArgentaria.
SDR basket.
State
University
anditsa master's degree in finance from Xiamen
The Fund also edged
toward
removing
University.
Chen
is as
a published author and was an instructor at
long-standing assessment
of the
yuan
currency.School.
Even so,
Chinese University of Hongreserve
Kong Business
barriers to its
undervalued.
widespread adoption remain formidable.
China has played its cards effectively.
Most obviously, more widespread
In terms of international payments, the
international use of the yuan requires
yuan is not in the top ranks of global
accelerated opening of China's capital
currencies. China's capital account
account. So far, the total quota for foreign
remains controlled, which means it's a
participation in its financial markets adds
stretch to describe the currency as "freely
up to about $170 billion. That's equal to
usable" a requirement for inclusion in
just 1.5 percent of global foreign
the SDR basket.
exchange reserves.
That means expectations and politics
China and Mongolia.
Capital account opening looks like a
are playing a critical role in the SDR
high-risk strategy. Outstanding credit has
decision. Expectations are driven by
swelled to more than 200 percent of GDP
China's continued rise, with potential to
in 2015, from about 125 percent in 2008.
rival the U.S. as the world's largest
A critical reason for confidence that
economy
in the next decade. The launch
of the AIIB will help shift the substance

tempestuous credit growth won't trigger a
crisis is that a controlled capital account
and the politics. AIIB loans might help
means borrowing is domestic and
push the yuan as an international
deposits are captive. A significant
currency. If China does not get a bigger
opening to cross-border flows would
voice in the IMF, its leaders can focus on
change that equation.
their own institutions.
As for the AIIB, China's expertise in
So far, so good. The challenge for
infrastructure development and deep
China is that moving from symbolic to
pockets are a formidable combination.
substantial victories will be tough to do.
Even so, development loans by definition
The yuan's admission into the SDR
go to projects that are high risk and low
basket would legitimize its use as a

David Dollar.
Page 8.
PAVING
THE
WAYBank
FORand
ASIA
return.
As the
World
Asian
GROWTH
Development Bank have found, those
Improving
and boosting
projects
are infrastructure
difficult to manage.
Starting
growth
are among
thestill
potential
from
scratch,
with rules
to be written
benefits
from AIIB investment.
and
zero institutional
knowledge, won't
Pageit 9.
make
any easier for the AIIB.
In the background are concerns about
TIMELINE
China's
growth. Bloomberg Economics
Bloomberg
Economics
tracksreforms,
a
believes
that with
far-reaching
decade
of the
yuan's
the
economy
could
endmajor
the decade with
milestones.
growth
still around 6 percent. That is not a
Page 10.
universal
view. Some analysts believe
China is set to collapse under the weight
of overcapacity and indebtedness. As
Japan discovered in the 1990s, when
growth ends, global influence goes with it.
The U.S. overtook the U.K. as the
world's main economic engine at the end
of the 19th century. It wasn't until the
creation of the Bretton Woods system
after World War II that it emerged as the
main power in the International Monetary
Fund, with the dollar anchoring the global
financial system. China's symbolic rise
has been breathtaking. It may be a while
before its substantial position catches up.
CONTRIBUTORS
YUAN
IN THE SDR BASKET TAMARA HENDERSON, BLOOMBERG ECONOMIST
4/27/2015 10:21:54 AM
4 27,
April
April
2015
27, 2015
CONTRIBUTORS
CONTRIBUTORS
Bloomberg
Bloomberg
BriefBrief
Economics
Economics
Asia Asia
1
CONTENTS
CONTENTS
GETTING
INTOSDR
THEBASKET
SDR BASKET
INTO THE
Tom Orlik
TomisOrlik
Bloomberg's
is Bloomberg's
chief Asia
chiefeconomist,
Asia economist,
based based
in Beijing.
in Beijing.
He
He GETTING
Chances
are
good
that
Chinas
Chances
are
good
that
Chinas
was previously
was previously
chief China
chief economics
China economics
correspondent
correspondent
for Thefor
Wall
The Wall
currency
be included
in the IMFs
currency
will be will
included
in the IMFs
Street Journal,
Street Journal,
China economist
China economist
for Stone
for &
Stone
McCarthy
& McCarthy
Research
Research
new Special
Drawing
in
new Special
Drawing
Rights Rights
basket basket
in
Associates
Associates
and a policy
and a analyst
policy analyst
at the British
at the British
Treasury.
Treasury.
He is the
He is the
January.
January.
author author
of Understanding
of Understanding
China'sChina's
Economic
Economic
Indicators.
Indicators.
Page 5.Page 4.
CHARTING
THE YUAN'S
CHARTING
THE YUAN'S
RISE RISE
While
of theinyuan
in global
While use
of use
the yuan
global
transactions
continues
rise, barriers
transactions
continues
to rise,to
barriers
moreprogress.
rapid progress.
remainremain
to moretorapid
Page 6.Page 5.
Tamara
Tamara
Henderson
Henderson
is a Ph.D
is aeconomist
Ph.D economist
with buywithasbuywellas
aswell as
sell-side
sell-side
experience,
experience,
covering
covering
G-3 economies
G-3 economies
and theand
emerging
the emerging
markets
markets
over a over
spanaofspan
25 years.
of 25 years.
She has
She
focused
has focused
on FX and
on FX
rates
and rates
TRADING
TRADING
RULESRULES
strategy
strategy
over the
over
past
the
12past
years
12and
years
has
and
accumulated
has accumulated
a strong
a strong
track track YUAN YUAN
Backtesting
analysis
yields
the trading
analysis
yields the
trading
record record
for her for
trade
herideas.
trade Previously,
ideas. Previously,
she was
she
anwas
economist
an economist
with thewith theBacktesting
rules
that
top
returns
for
the
offshore
rules
that
top
returns
for
the
offshore
International
International
Monetary
Monetary
Fund. Tamara
Fund. Tamara
is a CFA
is acharterholder
CFA charterholder
and theand the
yuan
in
the
past
three
years.
yuan
in
the
past
three
years.
author author
of 'Fixed
of Income
'Fixed Income
Strategy:
Strategy:
A Practitioner's
A Practitioner's
Guide to
Guide
Riding
to Riding
the
the
Page 8.Page 7.
Curve,'Curve,'
published
published
by Wiley.
by Wiley.
LESSONS
EXPERIENCE
LESSONS
FROM FROM
EXPERIENCE
The
AIIB
can
learn
from the
The
AIIB
can
learn
from
the
Fielding
Fielding
Chen is
Chen
an economist
is an economist
for Bloomberg
for Bloomberg
based based
in HonginKong.
Hong Kong.
experiences
of
the
World
Bank, says
experiences
of
the
World
Bank,
says
He wasHe
previously
was previously
a senior
a senior
economist
economist
for AsiaforatAsia
Banco
at Banco
Bilbao Bilbao
David
Dollar.
David
Dollar.
Vizcaya
Vizcaya
Argentaria.
Argentaria.
He holds
Heaholds
Ph.DainPh.D
economics
in economics
from Georgia
from Georgia
Page 9.Page 8.
State University
State University
and a master's
and a master's
degreedegree
in finance
in finance
from Xiamen
from Xiamen
University.
University.
Chen isChen
a published
is a published
author author
and was
and
anwas
instructor
an instructor
at
at
PAVING
THEFOR
WAYASIA
FOR ASIA
PAVING
THE WAY
Chinese
Chinese
University
University
of Hong
ofKong
HongBusiness
Kong Business
School.School.
GROWTH
GROWTH
Improving
infrastructure
and boosting
Improving
infrastructure
and boosting
are among
the potential
growthgrowth
are among
the potential
benefits
from
AIIB investment.
benefits
from AIIB
investment.
David David
Dollar Dollar
is a senior
is a senior
fellow with
fellow
thewith
John
theL.John
Thornton
L. Thornton
China China
Page 9.
Page 10.
CenterCenter
at Brookings
at Brookings
and anand
expert
an expert
on the on
Chinese
the Chinese
economy.
economy.
From From
2009 to2009
2013,
to he
2013,
washe
thewas
U.S.
theTreasury
U.S. Treasury
Department's
Department's
economic
economic
and and TIMELINE
TIMELINE
financial
financial
emissary
emissary
to China.
to China.
Previously,
Previously,
he worked
he worked
at the World
at the Bank
World BankBloomberg
Bloomberg
Economics
tracks a
Economics
tracks a
for more
forthan
more20than
years,
20 years,
including
including
servingserving
as country
as country
directordirector
for
for
of the yuan's
decadedecade
of the yuan's
major major
China and
China
Mongolia.
and Mongolia.
milestones.
milestones.
Page 10.
Page 11.
4/27/2015 10:21:55 AM
April 27, 2015
Bloomberg Brief
Economics Asia
5
3
4

CONTRIBUTORS
CONTENTS
TomStatus
Orlik is Bloomberg's
chief
Asia economist,
based
in Beijing.
Achieving SDR
for 2016:
China
May Get
the
YuanHeInto the
IMF's
Basket
Chances
are good
that Chinas

There is a real chance
Streetthat
Journal,
remaining
China economist
forthe
Stone
& McCarthy
Research
Yuan
Seventh
Most
Used World
Payments
Currency
new
Special Drawing
Rights basket in
hurdles for the Chinese
yuan can
bea policy analyst at the British Treasury. He is the
Associates
and
January.
cleared before the International
Monetary China's Economic Indicators.
author of Understanding
Page 4.
Fund's new SDR basket is implemented
on Jan. 1. IMF Managing Director
Christine Lagarde signaled last month
there was still a lot of ground to cover.
The issue is whether CNY has become
sufficiently usable inTamara
the five Henderson
years since is a Ph.D economist with buy- as well as
Page 5.
the last formal review
of the organization's
sell-side
Special Drawing Rights.
YUAN TRADING RULES
The SDR is an international
reserve
strategy over
the past 12 years and has accumulated a strong track
asset created by therecord
IMF. SDR
for her
value
trade
is ideas. Previously, she was an economist with the
based on a basket of
International
selected currencies
Monetary Fund. Tamara is a CFA charterholder and the
determined by the Fund
author
to of
be'Fixed
"freelyIncome Strategy: A Practitioner's Guide to Riding the
Page 7.
usable." These currencies
Curve,'are
published
currently
by Wiley.
the U.S. dollar, euro, yen and pound.
During the last review of the SDR
Chen
an economist for Bloomberg based in Hong Kong.
basket in 2010, the Fielding
IMF rejected
theisyuan
Hewas
wasnot
previously
because the currency
"freely a senior economist for Asia at Banco Bilbao
David Dollar.
Argentaria.
a Ph.D in economics from Georgia
usable." The politicalVizcaya
backdrop
was alsoHe holds
Page 8.
against China. CNYState
tradeUniversity
settlementand a master's degree in finance from Xiamen
University.
Chen is a published
author andofwas
instructor
at need
volumes were low and
very one-sided,
determination
freean
usability
would
only likely to grow, the granting of SDR
PAVING
THE
WAY
FORbeASIA
Chinese
University
Business School.
putting further upward

pressure
on the of HongtoKong
rely importantly
on judgment,
framed
status
at this
stage
would
an important
GROWTH
country's already enormous international
by the definition of freely usable currency
gesture of goodwill. On the inclusion of
Improving
infrastructure
and
boosting
reserves. IMF staff considered the yuan
set out in the Articles of Agreement."
the
yuan in the
SDR basket,
Lagarde
said
growth
are
among
the
potential
substantially undervalued and the real
The issue is no longer whether the yuan
last month "timing is something that we
benefits
from AIIB
investment.
effective exchange rate was depreciating.
is an international reserve currency, but
will
be discussing
amongst
ourselves."
Page
9.
Today, the yuan is much more usable
the extent to which it is a major player.
The
comment
is revealing there would
(see trends mapped out in Charting the
One indicator of progress: the notional
be nothing to finesse if this were purely a
TIMELINEdecision based on SWIFT
Yuan) and IMF politics are more
value of onshore yuan options contracts
mechanical
Bloombergand
Economics
tracks a
supportive. In particular, more than 30
cleared by the Depository Trust and
transactions
FX turnover.
decade
of
the
yuan's
major
central banks are believed to have
Clearing Corporation from week to week
The formal SDR review is not until
China and Mongolia.
milestones.
already begun reserve diversification into
usually rivals those for the yen.
October.
That allows time for China to
Page
10. with further reforms.
yuan. China also widened the yuan's
At the same time, the yuan is not there
push
ahead
trading band and CNY valuation has
yet in terms of daily turnover in the
Increased access for international
improved. The Fund's most recent Article
currency markets. Yuan turnover is 2.2
investors to the mainland's bond and
IV
percent of the total compared with 2.5
equity markets would bolster the yuan's
assessment in 2014 noted the yuan
had appreciated in real effective terms
percent for the Mexican peso, 4.6 percent
claim to be "freely usable."
consistent with underlying fundamentals,
for the Canadian dollar, 5.2 percent for
In the meantime, the Fund may
though not enough to eliminate what was
the Swiss franc, 8.6 percent for the
acknowledge the yuan's use as a reserve
characterized as a more "moderate
Australian dollar and 11.8 percent for the
currency by separately identifying CNY
undervaluation" between 5 percent and
British pound, according to the latest BIS
foreign reserves in its Currency
10 percent.
survey for 2013. The difference here is
Composition of Official Foreign Exchange
The yuan need not become fully
related to currency convertibility, which is
Reserves report. COFER currently lumps
convertible to satisfy the Fund's SDR
critical for the high-frequency trading that
the yuan into the group, "Other
requirement that a currency be "freely
China has so far steered clear of. Still,
Currencies," which accounts for 3 percent
usable." According to the Articles of
China's share of SWIFT transactions is
of allocated reserve holdings. This
Agreement of the IMF (Article XXX), the
similarly small, albeit quickly rising.
compares with 4 percent shares for the
yuan need only be "widely used to make
There is nevertheless a good chance
separately identified yen and pound, 2
payments for international transactions"
the yuan will be included in the SDR
percent shares for the Australian and
and "widely traded in the principal
basket from January 2016 as political
Canadian dollars, and a 0.3 percent share
exchange markets."
pragmatism trumps economic detail. As
for the Swiss franc.
The IMF also has some wiggle room in
the world's second largest economy, and
The Fund could also adopt a more
its assessment of usability. The Fund's
with growth robust as many developed
congenial tone in the IMF's Article IV
Executive Board said in 2010 that
countries remain stagnant, China now
assessment for China due this year.
indicators should not be used
has greater heft in international decision
These could all be signals of CNY's shift
"mechanistically" and that "ultimately, the
making. Since China's economic power is
to SDR status in January.
CHARTING
YUAN
IN THE
THE
SDR
YUAN
BASKET
TOM ORLIK
TAMARA
AND FIELDING
HENDERSON,
CHEN,BLOOMBERG
BLOOMBERGECONOMIST
ECONOMISTS
4/27/2015 10:21:55 AM
6 27,
April
April
2015
27, 2015
Bloomberg
Bloomberg
BriefBrief
Economics
Economics
Asia Asia
5
CHARTING
CONTRIBUTORS
THE YUAN TOM ORLIK AND FIELDING CHEN, BLOOMBERG ECONOMISTS
CONTENTS
Use of Chinas currency Associates
in trade andand a policy
analyst
at
the
British
Treasury.
He
is
the
Growing Importance in Trade Settlements,
Global Payments
January.
foreign exchange transactions
author
continues
of Understanding China's Economic Indicators.
Page 4.
to rise. Limited foreign access to the
mainlands markets remains a barrier to
more rapid progress.
Trade Settlement Tamara Henderson is a Ph.D economist with buy- as well as
Page 5.
As the worlds largest exporter,
sell-side
China
experience,
has
covering G-3 economies and the emerging
Rise of the Yuan as an International Currency
a natural advantage when markets

it comesover
to a span of 25 years. She has focused on FX and rates
YUAN TRADING RULES
raising the importance of the
strategy
yuan in
over the past 12 years and has accumulated a strong track
trade settlement. The datarecord
showsfor
1.65
her trade ideas. Previously, she was an economist with the
trillion yuan of Chinas imports
International
and
exports were settled in yuan
author
in theoffirst
'Fixed Income Strategy: A Practitioner's Guide to Riding the
Page 7.
quarter, unchanged from the
Curve,'
samepublished
period by Wiley.
a year earlier. Thats equal to about 30
percent of total trade.
of the
World Bank, says
Shows
Yuan
in Ninth
Global FX
Market
He was previously a BIS
seniorData
economist
for Asia
at Banco
Bilbao Place inexperiences
Global Payments Vizcaya Argentaria. He holds a Ph.D in economics from Georgia
David Dollar.
Page 8.
Chinas share of total payments
processed on the Swift network
University.
continues
Chen is a published author and was an instructor at
to edge up. As of FebruaryChinese
2015, the
University of Hong Kong Business School.
GROWTH
yuan made up 1.8 percent of total
payments, up from 1.4 percent a year
ago. The yuan is the seventh most used
global currency, fractionally behind the
Page 9.
Canadian dollar and the Swiss franc.
TIMELINE
BIS FX Transactions
The Bank for International Settlements
China and Mongolia.
milestones.
data on FX market turnover provides a
Page 10.
more comprehensive read on the yuans
global position. Unfortunately, the BIS
review is carried out only once every
three years.
The latest data, from 2013,
Yuan's Bid-Ask Spreads Still Wider Than Rivals'

shows the yuan in ninth place with 2.2
percent of global turnover. Based on the
Swift payments data, its ranking has likely
improved a little since then.
Bid-Ask Spreads
Bid-ask spreads in currency markets
provide a more high-frequency reading on
the yuans relative position. A tight
bid-ask spread suggests strong liquidity
and trading activity. On that basis, the
yuans position remains some way off that
of the euro, yen and sterling. Bid-ask
spreads so far in 2015 have averaged
0.03 percent and 0.05 percent in the
onshore and offshore yuan markets,
respectively, compared with 0.01 percent
for the euro, yen and sterling.
Continued on next page
4/27/2015 10:21:55 AM
April 27, 2015
Bloomberg Brief
CONTRIBUTORS
CHARTING THE YUAN
Continued from previous page...

Dim Sum Bond
Issuance
Street Journal, China economist
for StoneStill
& McCarthy
Research
Investors
Hungry
for Dim
The Peoples Bank of
China continues
to analyst at the British Treasury. He is the
Associates
and a policy
come up with ingenious
workarounds
to
author
of Understanding
China's Economic Indicators.
promote yuan internationalization without
capital-account opening. Rapid growth of
the dim sum bond market means
international investors dont need to bring
funds into China to buy yuan assets.
Offshore yuan bondTamara
issuanceHenderson
rocketed tois a Ph.D economist with buy- as well as
270 billion yuan in 2014,
up 153
percent covering G-3 economies and the emerging
sell-side
experience,
from 107 billion yuan
in 2013.
Issuance
markets
over
a span of 25 years. She has focused on FX and rates
has slowed this yearstrategy
as offshore
over yuan
the past 12 years and has accumulated a strong track
rates have risen andrecord
access
thetrade ideas. Previously, she was an economist with the
fortoher
mainland market increased.
International
Bilateral Agreements
Economics Asia
7
3
6
CONTENTS
Sumnew
Bonds
Special Drawing Rights basket in
January.
Page 4.
Page 5.
YUAN TRADING RULES
Page 7.

Swap agreements totaling 3.5 trillion yuan
have now been signed
between
theis an economist for Bloomberg based in Hong Kong.
Fielding
Chen
of the World Bank, says
PBOC and more than
other
central a seniorCurrency
He30
was
previously
economist forSwap
Asia at Banco
Bilbao
Agreements
Swellexperiences
to 3.5 Trillion
Yuan
David
Dollar.
banks. Currency swaps
can Argentaria.
be used by He holds a Ph.D in economics from Georgia
Vizcaya
Page 8.
trade partners to cushion
against a and a master's degree in finance from Xiamen
State University
balance of paymentUniversity.
crisis. As such,
Chenthey
is a published author and was an instructor at
reduce other centralChinese
banks need
for of Hong Kong Business School.
University
GROWTH
dollars and mean the yuan is already
playing a role as a de facto reserve
currency.
Page 9.
Hong Kong-Shanghai
TIMELINE
Exchange
The start of Mutual Market
for moreAccess
than 20 years, including serving as country director for
between Shanghai and
Hong
equity
China
andKong
Mongolia.
milestones.
markets last year represented a step
Page 10.
toward market opening. So far, its
reception has been lukewarm, with more
than 50 percent of the inbound quota and
percent of the outbound still unused.
70
Quotas Limit Yuan's Progress as a Reserve Currency
QFII and RQFII

Despite its progress, the scope for the
yuan to emerge as a reserve currency
remains limited by controls on access to
the mainland markets. Adding up the
quotas under the Qualified Foreign
Institutional Investor, Renminbi Qualified
Foreign Institutional Investor and Mutual
Market Access schemes, foreigners can
bring a total of about $170 billion into
Chinas markets. By way of comparison,
global FX reserves are about $11.6
trillion.
TRADING
YUAN
IN THE
RULES
SDRTAMARA
BASKET
HENDERSON,
TAMARA
BLOOMBERG
HENDERSON,
ECONOMIST
BLOOMBERG ECONOMIST
4/27/2015 10:21:55 AM
8 27,
April
April
2015
27, 2015
Bloomberg
Bloomberg
BriefBrief
Economics
Economics
Asia Asia
7
TRADING
CONTRIBUTORS
RULES TAMARA HENDERSON, BLOOMBERG ECONOMIST
Moving average rules have
been and a policy
Associates
analyst at the British
Treasury.
He Width
is the of
Performance
During
Band
generating more and moreauthor
consistent
returns for the onshore and offshore
Chinese yuan during the past three years.
The outperformance coincides with the
widening of the daily trading band from
plus or minus 0.5 percent of China's daily
central parity rate against the
Tamara
U.S. dollar
Henderson is a Ph.D economist with buy- as well as
to 1 percent in April 2012 and
sell-side
2 percent
experience,
in
covering G-3 economies and the emerging
March 2014. The Accumulation
Distribution Oscillator and Ichimoku
signals also performed wellrecord
withinfor
theher trade ideas. Previously, she was an economist with the
group of strategies included
International
in
Bloombergs back-testing function
{BTST<GO>}.
Since the yuan trading band has been
plus or minus 2 percent of the daily fixing,
Fielding
Chen is an economist for Bloomberg based in Hong Kong.
the Accumulation Distribution
Oscillator
He was
has earned the highest return
for previously a senior economist for Asia at Banco Bilbao
holds a Ph.D in During
economicsBand
from Georgia
CNHUSD, 4.1 percent. TheVizcaya
SimpleArgentaria. He
Performance
Width of
State
Moving Average rule was the
topUniversity
strategy and a master's degree in finance from Xiamen
for CNYUSD, earning 3 percent.
University of Hong Kong Business School.
SMA has been one of theChinese
top three
performing rules for both currency pairs
since April 2012. SMA has earned 1.9
percent for CNHUSD and 3 percent for
CNYUSD during the latest period, with
the band at plus or minus 2 percent
compared with losses for the Buy & Hold
rule. SMA earned 6.2 percent for
CNHUSD and CNYUSD when the trading
band was 1 percent either side of parity,
China and Mongolia.
compared with earnings of 2.4 percent
and 2.5 percent, respectively, for Buy &
Hold.
Weighted MA, Triangular MA and
Exponential
MA rules have outperformed
Buy & Hold

strategies by a margin of at
least 1.4 percentage points since April
Performance During Band Width of
2012.
Between August 2010 and April 15,
2012, when the trading band was plus or
minus 0.5 percent, Buy & Hold
outperformed. Rules that earned profits
for the offshore yuan often generated
losses for the onshore yuan, and vice
versa. Since April 2012, winning rules for
the offshore yuan have also tended to be
profitable for the onshore yuan.
Moving average rules can be more
effective in established trends, while
oscillators are designed to signal turning
points. Oscillators might send false
signals in a moving market, while
trend-following indicators may
underperform in a stable market.
CONTENTS
+/- January.
2 Percent
Page 4.
Moving Average Rules Top Yuan Returns Since China's Trading Band Widening

Page 5.
YUAN TRADING RULES
Page 7.
David Dollar.
+/- Page
1 Percent
8.
GROWTH
Page 9.
TIMELINE
milestones.
Page 10.
+/- 0.5 Percent
LESSONS
YUAN IN
FROM
THE EXPERIENCE
SDR BASKET GUEST
TAMARA
COMMENTARY
HENDERSON,BY
BLOOMBERG
DAVID DOLLAR,
ECONOMIST
BROOKINGS INSTITUTION
4/27/2015 10:21:56 AM
April 27, 2015
Bloomberg Brief
9
3
8
Economics Asia
LESSONS FROM EXPERIENCE GUEST COMMENTARY BY DAVID DOLLAR,

CONTRIBUTORS
BROOKINGS INSTITUTION
CONTENTS
To understand theAssociates
impetus forand a policy analyst
at the British Given
Treasury.
He is the of
videoconference.
the newness
launching the Asianauthor
Infrastructure
of Understanding China's
Economic
the bank,
a likelyIndicators.
compromise among the
Investment Bank, look no further than
countries that have signed up is that the
Chinas concern that the governance
board will approve many of the initial
structure of existing international financial
projects and eventually delegate more
institutions was evolving too slowly. An
decision-making to management.
important agreement to increase the
The Zedillo report recognizes the
resources of the International
Tamara Henderson
Monetary is a Ph.D
economist
with buy- as well
importance
of environmental
andassocial
Fund and to raise the
sell-side
voting experience,
shares of covering
G-3 economies
andthat
the emerging
safeguards
but argues
the World
fast-growing emerging
markets
markets,
overratified
a spanby
of 25 years.
Shebecome
has focused
onaverse
FX andthat
rates
Bank has
so risk
the
other nations, has been
strategy
stalled
over
in the
the past
U.S.12 years
and has accumulated
a strong
track
implementation
of these policies
imposes
Congress. It is ironicrecord
that one
for of
herChinas
trade ideas. Previously,
she was
an economist
with the
an unnecessary
burden
on borrowing
frustrations with the International
U.S.-dominated
Monetary Fund.
Tamara In
is practice,
a CFA charterholder
countries.
developing and the
institutions is that China
author
sees
of 'Fixed
a needIncome
for
Strategy:
A Practitioner's
to Riding
countries
have moved Guide
away from
usingthe
more resources andCurve,'
is willing
published
to
by Wiley.the existing multilateral development
contribute, whereas the different parts of
the U.S. government cannot agree to this

expansion.
wasjust
previously
a senior economist for Asia at Banco Bilbao
Chinas frustrationHe
is not
about the
Vizcaya
He holds a Ph.D in economics from Georgia
size of the institutions
and itsArgentaria.
weight
StateofUniversity
within them. In the case
the Worldand a master's degree in finance from Xiamen
University.
Chen
Bank, China has argued
for years
foris a published author and was an instructor at
Chinese University
of Hong Kong Business School.
more focus on infrastructure
and growth.
Several years ago, Ernesto Zedillo,
former President of Mexico, chaired a
High-Level Commission on
Modernization of World Bank Group
Governance. This was a serious effort by
a distinguished international committee,
including Zhou Xiaochuan from China and
other emerging market heavyweights.
The Zedillo report is quite critical of the
China and Mongolia.

current World Bank arrangement of a
banks to finance infrastructure because
resident board that approves all loans.
they are so slow and bureaucratic. The
The resident board is both a large
enthusiastic response of developing
financial cost to the bank ($70 million per
countries in Asia to the AIIB concept
year)
and an extra layer of management
reflects their sympathy with the idea that
that slows down project preparation and

a bank can have good safeguards and
makes the bank less efficient. Slowness
still be quicker and more efficient than the
of project preparation is one of the main
existing banks.
criticisms of clients concerning the poor
Some of the Western commentary on
performance of the multilateral
AIIB expresses a fear that China will use
development banks.
the bank for narrow political or economic
The Chinese officials charged with
ends. Now that a diverse group of nearly
developing AIIB are looking at the Zedillo
60 countries have signed up, it would be
report for ideas. It is likely that the bank
difficult for China to use the bank to
will have a non-resident board that meets
finance projects in favored countries over
periodically in Beijing and also by
the exclusion of other members.
Lessons for the AIIB From the Experience of the World Bank
"The idea that AIIB

projects would help
absorb Chinas
over-capacity problem
does not make any
sense at all."

new idea
Special
Rightswould
basket
in
The
thatDrawing
AIIB projects
help
January.
absorb Chinas over-capacity problem
Page
does
not4.make sense. If the bank is very
successful, then in five years it might lend
CHARTING
RISE
$20
billion per THE
year,YUAN'S
on a scale
with the
WhileBanks
use ofInternational
the yuan in global
World
Bank for
transactions continues
to rise, barriers
Reconstruction
and Development
lending.
remain
to
more
rapid
progress.
In the steel sector alone, China would
Page
5. billion per year of extra demand
need
$60
to absorb excess capacity. Add in excess
YUAN TRADING
capacity
in cement, RULES
heavy machinery and
Backtesting
analysis
yields
thethe
trading
other
sectors
the point
is that
bank
rules
that
top
returns
for
the
offshore
is just way too small to make any dent in
yuan
in the
past three
years.even if
the
excess
capacity
problem,
Page
7.
China were the sole supplier for these
projects, which it wont be.
LESSONS
FROM EXPERIENCE
The
initial success
of AIIB is a
The
AIIB
can
learn
from the
diplomatic victory
for China.
The U.S.
experiences
of
the
World
diplomatic response has notBank,
been says
adroit,
David
Dollar.
playing into the narrative of U.S. decline
8.
in Page
the Asia-Pacific.
But that perception
could change quickly. Infrastructure is the
PAVING THE
WAY FOR
ASIA which
hardware
of economic
integration,
GROWTH
is certainly necessary. But trade
Improving infrastructure
and boosting
agreements
such as the Trans-Pacific
growth
are
among
the
potential
Partnership are the software. If the U.S.
benefits
from AIIB
and
its partners
can investment.
negotiate and
Page 9. this agreement for deeper
implement
integration, that will provide a large boost
forTIMELINE
the members and reestablish U.S.
BloombergtoEconomics
trackseconomy.
a
importance
the Asia-Pacific
decade
of
the
yuan's
major
China pursuing AIIB and other initiatives
milestones.
that
do not include the U.S., while the
Page
10.
TPP
negotiations
do not involve China,
creates a risk of competing blocs and
institutions. In my view, though, the most
likely outcome is the world ends up with a
more robust and inclusive set of
institutions. AIIB is likely to make the
other development banks more effective
and become a part of the global
architecture. China and other Asian
countries not now involved in TPP are
likely to join if it is successful. Bringing the
hardware and the software together, the
outcome could be a more integrated
Asia-Pacific economy.
PAVING
YUAN
INTHE
THEWAY
SDR FOR
BASKET
ASIA'S
TAMARA
GROWTH
HENDERSON, BLOOMBERG
FIELDING CHEN,
ECONOMIST
BLOOMBERG ECONOMIST
4/27/2015 10:21:56 AM
10
April 27,
April
2015
27, 2015
Bloomberg
Bloomberg
BriefBrief
Economics
Economics
Asia Asia
9
PAVING
CONTRIBUTORS
THE WAY FOR ASIA'S GROWTH FIELDING CHEN, BLOOMBERG
ECONOMIST
CONTENTS
Tom Orlik is Bloomberg's

chief Asia
economist,
based in Beijing.From
He
China's New Development
Bank Aims
to Clear
Underbrush
Asian
Track
ChancesGrowth
are good that
Chinas

If it can overcome operational
Streetand
Journal, ChinaAsias
economist
for Stone & McCarthy
Research
Infrastructure
Lags
as % of U.S.new
Level
Special Drawing Rights basket in
political challenges, the China-led
Asian
Associates
and a policy analyst at the British Treasury. He is the
January.
Infrastructure Investment Bank
may
author
Page 4.
reduce infrastructure bottlenecks and
boost developing Asias potential output
by more than 1 percentage point. The
AIIB is poised to emerge as Asia's biggest
investment-focused multinational
development bank.
Page 5.
Though it's the world's fastest
growing
sell-side
region, developing Asia remains
markets
impeded
over a span of 25 years. She has focused on FX and rates
YUAN TRADING RULES
by rusting and inadequate strategy
transport,over the past 12 years and has accumulated a strong track
power and communicationsrecord
networks.
for her trade ideas. Previously, she was an economist with the
AIIB resources will be targeted
International
at
remedying that situation. The
author
bank
ofwill
'Fixed Income Strategy: A Practitioner's Guide to Riding the
Page 7.
probably launch by the endCurve,'
of the year
published by Wiley.
and has attracted interest from 57 nations
worldwide.
World Bank data show aFielding
big gap Chen is an economist for Bloomberg based in Hong Kong.
He was
between infrastructure in Asia
and previously a senior economist for Asia at Banco Bilbao
David Dollar.
Vizcaya
Argentaria. He holds a Ph.D in economics from Georgia
developed countries. Compared
with
Page 8.
University and a master's degree in finance from Xiamen
India's 2.3 telephone lines State
per 100
Expected
Capital
Structure
Chen is aAIIB's
published
author and was
an instructor
at
people, the U.S. has 42.2. University.
While
Indonesia has 1.3 fixed broadband
GROWTH
Internet subscribers per 100 people, the
U.S. has 29.3. The least-developed Asian
countries have even bigger disparities.
Asia may need about $750 billion per
Page 9.
year from now until 2020 to finance
projects in transportation, energy supply,
TIMELINE
water facilities and other areas, according
to the Asian Development Bank. A
business taskforce reporting to the G20
China and Mongolia.
milestones.
forecasts that a third to a fourth of
Page 10.
infrastructure investment needs in the
coming 15 years may find difficulty in
getting financing.
The AIIB
would be well positioned to
reduce that shortfall. The bank's initial

subscribed capital will be at least $50
billion and is expected to rise to $100
billion. Its paid-in capital is 20 percent of
its total subscribed capital, or about $20
billion. Callable capital makes up the
remaining 80 percent. While the World
Bank and the Asian Development Bank
have higher subscribed capital of $233
billion and $162.8 billion, respectively,
they have lower paid-in capital at $14.4
billion and $8.2 billion.
What sets the AIIB apart is its focus on
infrastructure. The ADB committed about
60 percent of its $21 billion in new loans
in 2013 to infrastructure projects, or about
$12.6 billion. Given the AIIB's sole focus
on infrastructure, its capacity to make
loans toward building Asia's bridges and
power plants might be 60 percent to 70
percent greater than its Manila-based

rival's.
The result may be a boost to
infrastructure investment in non-China
developing Asia of up to 0.5 percent of
GDP a year. Long term, that may boost
potential GDP in these countries by 1 to
1.5 percentage points. According to the
IMF, a 1 percentage point increase in
infrastructure investment as a proportion
of GDP can raise annual output by 2-to-3
percentage points long term.
Development finance is not easy, even
with major resources. Development
institutions must take on projects almost
by definition too risky for the private
sector. The AIIB will take time to tackle

questions about governance and funding
as it ramps up to full capacity. Political
concerns and overlap with other
institutions are also barriers to rapid
progress.
Still, China's record of infrastructure
development, the AIIB's ample resources,
and evident investment need across the
region mean there are both motive and
opportunity to make a difference. In an
optimistic scenario, the AIIB's position as
a regional investment hub could
drastically reduce Asia's infrastructure
shortfalls and anchor future development.
TIMELINE
YUAN IN
TOMTHE
ORLIK, SDR
BLOOMBERG
BASKET
ECONOMIST, AND
TAMARA
JENNIFER
HENDERSON,
BERNSTEIN,
BLOOMBERG
BLOOMBERG
ECONOMIST
BRIEF EDITOR
4/27/2015 10:21:56 AM
April 27, 2015
Bloomberg Brief
Economics Asia
11
10
3
TIMELINE TOM ORLIK, BLOOMBERG ECONOMIST, AND JENNIFER BERNSTEIN, BLOOMBERG

CONTRIBUTORS
BRIEF EDITOR
CONTENTS




China and Mongolia.

January.
Page 4.
Page 5.
YUAN TRADING RULES
Page 7.
David Dollar.
Page 8.
GROWTH
Page 9.
TIMELINE
milestones.
Page 10.
4/27/2015 10:21:59 AM
12
April 27,
April
2015
27, 2015
Bloomberg
Bloomberg
BriefBrief
Economics
Economics
Asia Asia
11
CONTRIBUTORS



China and Mongolia.
CONTENTS
January.
Page 4.
Page 5.
YUAN TRADING RULES
Page 7.
David Dollar.
Page 8.
GROWTH
Page 9.
TIMELINE
milestones.
Page 10.
4/27/2015 10:21:59 AM
Bloomberg Brief
April 27, 2015
CONTRIBUTORS




China and Mongolia.
Economics Asia
13
12
3
CONTENTS
January.
Page 4.
Page 5.
YUAN TRADING RULES
Page 7.
David Dollar.
Page 8.
GROWTH
Page 9.
TIMELINE
milestones.
Page 10.
CONTACTS
YUAN
IN THE SDR BASKET TAMARA HENDERSON, BLOOMBERG ECONOMIST
4/27/2015 10:21:59 AM
14
April 27,
April
2015
27, 2015
Bloomberg
Bloomberg
BriefBrief
Economics
Economics
Asia Asia
13
April 27, 2015
Bloomberg Brief
CONTACTS
CONTRIBUTORS
CONTACTS
Bloomberg Briefs
Street Journal,
China
economist
McCarthyEditors
Research
Bloomberg Brief Managing Editor
Economics
Editors
- U.S. for Stone &Economics
- Europe
Associates
and
a policy analyst at the BritishPaul
Treasury.
Jennifer RossaBriefs
Anne
Riley
Smith He is the
Bloomberg
author ofEconomics
Understanding
jrossa@bloomberg.net
ariley17@bloomberg.net
psmith152@bloomberg.net
Bloomberg
Brief Managing Editor
EditorsChina's
- U.S. Economic Indicators.
Economics
Editors - Europe
+1-212-617-8074
+1-212-617-0061
+44-20-3525-8653
Jennifer
Rossa
Anne
Riley
Paul
Smith
jrossa@bloomberg.net
Economics Editors - Asia
+1-212-617-8074
Justin Jimenez
jjimenez68@bloomberg.net
Economics Editors - Asia
+852-2977-2217
Justin Jimenez
ariley17@bloomberg.net
William C. Johnsen
+1-212-617-0061
wjohnsen3@bloomberg.net
+1-212-617-0509
William C. Johnsen
psmith152@bloomberg.net
Scott Johnson
+44-20-3525-8653
sjohnson166@bloomberg.net
+44-20-3525-8027
Scott
Johnson
Tamara wjohnsen3@bloomberg.net
Henderson is a Ph.D economist with
buy- as well as
sjohnson166@bloomberg.net
sell-side
experience,
covering
G-3
economies
and
the emerging
Ben Baris
Alex Brittain
jjimenez68@bloomberg.net
+1-212-617-0509
+44-20-3525-8027
markets
over
a
span
of
25
years.
She
has
focused
on FX and rates
Jennifer Bernstein
bbaris1@bloomberg.net
abrittain4@bloomberg.net
+852-2977-2217
overBaris
the past 12
jbernstein60@bloomberg.net strategy Ben
+1-212-617-2459
years and has accumulated
+44-20-3525-3183
track
Alex
Brittaina strong
record
for
her
trade
ideas.
Previously,
she
was
an
economist
with the
+852-2977-6733
Jennifer
Bernstein
bbaris1@bloomberg.net
abrittain4@bloomberg.net
International
Monetary
Fund.
Tamara
is
a
CFA
charterholder
and
the
James Crombie
Cover Design
jbernstein60@bloomberg.net
+1-212-617-2459
+44-20-3525-3183
author
of
'Fixed
Income
Strategy:
A
Practitioner's
Guide
to
Riding
the
Stew Hawkins
jcrombie8@bloomberg.net
Pekka Aalto
+852-2977-6733
Curve,'
published
by
Wiley.
shawkins40@bloomberg.net
+1-212-617-3590
pekka2@bloomberg.net
James
Crombie
Cover
Design
+852-2977-6019
Stew
Hawkins
shawkins40@bloomberg.net
+852-2977-6019
jcrombie8@bloomberg.net
+1-212-617-3590
+852-2977-6013
Pekka
Aalto
pekka2@bloomberg.net
Bloomberg
based in Hong Kong.
+852-2977-6013
Fielding Chen is an economist for

Bloomberg
Intelligence Economics
Chief
Economist
Asia Economist
U.S. Economist
State University
and a master's degree in finance
from Xiamen
Michael
McDonough
Fielding Chen
Richard Yamarone
Bloomberg
Intelligence Economics
University.
Chen is a published author and was
an instructor at
Economics Asia
CONTENTS
13

Business Manager
newNewsletter
Special Drawing
Rights basket in
Nick Ferris
January.
nferris2@bloomberg.net
Newsletter Business Manager
Page
4.
+1-212-617-6975
Nick Ferris
nferris2@bloomberg.net
CHARTING
THE YUAN'S RISE
Advertising
+1-212-617-6975
While
use of the yuan in global
Adrienne Bills
transactions
continues to rise, barriers
abills1@bloomberg.net
Advertising
remain
to more rapid progress.
+1-212-617-6073
Adrienne Bills
Page 5.
abills1@bloomberg.net
Reprints
& Permissions
+1-212-617-6073
YUAN
TRADING
RULES
Lori Husted
Backtesting
analysis yields the trading
lori.husted@theygsgroup.com
Reprints & Permissions
rules
that top returns for the offshore
+1-717-505-970
Lori Husted

lori.husted@theygsgroup.com
Page
7.
+1-717-505-970

David Dollar.
Europe
Page
8. Economist
Maxime Sbaihi
mmcdonough10@bloomberg.net
schen609@bloomberg.net
ryamarone@bloomberg.net
Chief
Economist
Economist
Economist
Chinese Asia
University
of Hong Kong Business U.S.
School.
+1-212-617-6815
+852-2977-4830
+1-212-617-8737
Michael
McDonough
Fielding
Chen
Richard
Yamarone
mmcdonough10@bloomberg.net
schen609@bloomberg.net
ryamarone@bloomberg.net
Chief Asia Economist
Chief U.S. Economist
Chief EMEA Economist
+1-212-617-6815
+852-2977-4830
+1-212-617-8737
Tom Orlik
Carl Riccadonna
Jamie Murray
David Dollar
is
a senior
fellow with the JohnChief
L. Thornton
China
torlik4@bloomberg.net
criccadonna3@bloomberg.net
jmurray126@bloomberg.net
Chief
Asia Economist
Chief
U.S.
Economist
EMEA Economist
Center atCarl
Brookings
and an expert on the Chinese
economy. From
+86-10-6649-7211
+1-212-617-6935
+44-20-3525-0867
Tom
Orlik
Riccadonna
Jamie
Murray
msbaihi@bloomberg.net
EuropeTHE
Economist
PAVING
WAY FOR ASIA
+44-20-3525-4538
Maxime Sbaihi
GROWTH
msbaihi@bloomberg.net
Improving
infrastructure and boosting
Europe
+44-20-3525-4538
growth
areEconomist
among the
potential
Niraj Shah
benefits
from AIIB investment.
nshah185@bloomberg.net
Europe
Page
9. Economist
torlik4@bloomberg.net
Asia Economist
+86-10-6649-7211
Tamara Henderson
thenderson14@bloomberg.net
Asia Economist
+65-6212-1140
Tamara Henderson
nshah185@bloomberg.net
TIMELINE
+44-20-7330-7383
Bloomberg
Economics tracks a
milestones.
Page 10.
thenderson14@bloomberg.net
+65-6212-1140
2009 to 2013,
he was the U.S. Treasury Department's
economic and
criccadonna3@bloomberg.net
jmurray126@bloomberg.net
financial +1-212-617-6935
emissary
to China.
Previously, he worked
at the World
Bank
U.S.
Economist
Chief Euro-Area
Economist
+44-20-3525-0867
for more Josh
thanWright
20 years, including serving asDavid
country
director
for
Powell
China and
Mongolia.
jwright136@bloomberg.net
dpowell24@bloomberg.net
U.S.
Economist
Chief
Euro-Area Economist
+1-212-617-3794
Josh
Wright
jwright136@bloomberg.net
+1-212-617-3794
+44-20-7073-3769
David
Powell
dpowell24@bloomberg.net
+44-20-7073-3769
+44-20-7330-7383
Niraj Shah
4/27/2015 10:21:59 AM
4/27/2015 10:22:00 AM
16
Bloomberg Brief
April 27, 2015
CONTRIBUTORS



China and Mongolia.
Economics Asia
CONTENTS
January.
Page 4.
Page 5.
YUAN TRADING RULES
Page 7.
David Dollar.
Page 8.
GROWTH
Page 9.
TIMELINE
milestones.
Page 10.
2015 Bloomberg LP
4/27/2015 10:22:00 AM

China Updated Global Stage

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April 27, 2015 | www.bloombergbriefs.

April 27, 2015

Tom Orlik is Bloomberg's chief Asia economist, based in Beijing. He

GETTING INTO THE SDR BASKET

CHINA ON THE GLOBAL STAGE

Fielding Chen is an economist for Bloomberg based in Hong Kong.

David Dollar is a senior fellow with the John L. Thornton China

CHARTING THE YUAN'S RISE

YUAN IN THE SDR BASKET TAMARA HENDERSON, BLOOMBERG ECONOMIST

US Letter print w-bleeds PA .indd 1

US Letter print w-bleeds PA .indd 2

April 27, 2015

INTRODUCTION TOM ORLIK, BLOOMBERG ECONOMIST

GETTING INTO THE SDR BASKET

China's Yuan and AIIB Wins Symbolic, Not Yet Substantive

yuan moved a step closer to reserve

of the AIIB will help shift the substance

LESSONS FROM EXPERIENCE

US Letter print w-bleeds PA .indd 3

YUAN IN THE SDR BASKET TAMARA HENDERSON, BLOOMBERG ECONOMIST

US Letter print w-bleeds PA .indd 4

April 27, 2015

YUAN IN THE SDR BASKET TAMARA HENDERSON, BLOOMBERG ECONOMIST

currency will be included in the IMFs

putting further upward

US Letter print w-bleeds PA .indd 5

Rise of the Yuan as an International Currency

a natural advantage when markets

Yuan's Bid-Ask Spreads Still Wider Than Rivals'

YUAN IN THE SDR BASKET TAMARA HENDERSON, BLOOMBERG ECONOMIST

US Letter print w-bleeds PA .indd 6

April 27, 2015

Tom Orlik is Bloomberg's chief Asia economist, based in Beijing. He

LESSONS FROM EXPERIENCE

QFII and RQFII

US Letter print w-bleeds PA .indd 7

Buy & Hold

CHARTING THE YUAN'S RISE

+/- 0.5 Percent

US Letter print w-bleeds PA .indd 8

April 27, 2015

LESSONS FROM EXPERIENCE GUEST COMMENTARY BY DAVID DOLLAR,

the U.S. government cannot agree to this

China and Mongolia.

that slows down project preparation and

"The idea that AIIB

GETTING INTO THE SDR BASKET

US Letter print w-bleeds PA .indd 9

Tom Orlik is Bloomberg's

currency will be included in the IMFs

reduce that shortfall. The bank's initial

percent greater than its Manila-based

sector. The AIIB will take time to tackle

US Letter print w-bleeds PA .indd 10

April 27, 2015

TIMELINE TOM ORLIK, BLOOMBERG ECONOMIST, AND JENNIFER BERNSTEIN, BLOOMBERG

Tom Orlik is Bloomberg's chief Asia economist, based in Beijing. He

Tamara Henderson is a Ph.D economist with buy- as well as

Fielding Chen is an economist for Bloomberg based in Hong Kong.

David Dollar is a senior fellow with the John L. Thornton China

GETTING INTO THE SDR BASKET

YUAN IN THE SDR BASKET TAMARA HENDERSON, BLOOMBERG ECONOMIST

US Letter print w-bleeds PA .indd 11

Tamara Henderson is a Ph.D economist with buy- as well as