(Yicai) June 24 -- Chinese and foreign experts have discussed the internationalization process of the Chinese yuan at a sub-forum organized during the World Economic Forum’s Annual Meeting of New Champions, also known as the Summer Davos forum.

Topics of discussion at yesterday’s sub-forum included the recent breakthroughs in the internationalization of the yuan, the yuan appreciation trend, and how Shanghai and Hong Kong, as China’s key financial hubs, can join forces to energize the country’s financial opening up.

China continues to lay out offshore yuan centers and build supporting financial institutions and product systems to help promote the offshore use of the yuan, said Zhu Ning, finance professor at Shanghai Advanced Institute of Finance, Shanghai Jiao Tong University. Meanwhile, the strong resilience of the Chinese economy keeps increasing the willingness of global markets to hold yuan, supported by the implementation of normalized currency swap arrangements and the trading needs of cross-border trade and investment, he added.

The core of promoting the internationalization of the yuan does not rely on a single path but on diversified development, according to Ashor Nick Sarupen, South Africa’s deputy finance minister. Under the framework of balancing transparency and interoperability, cross-border financial cooperation between China and South Africa continues to deepen.

The internationalization of the yuan is steadily advancing, but the development of the three currency functions is still uneven, and there is still great room for improvement, said Liu Zongyuan, senior researcher for China studies at the Council on Foreign Relations, a US think tank.

The yuan’s cross-border settlement function is maturing, supporting the rapid implementation of the internationalization plan, Liu noted. However, the pricing currency function lags behind, having still significant room for improvement, she added.

As global commodity trading gradually moves away from being dominated by a single reserve currency, the development potential of the yuan as a commodity pricing and trading currency is enormous, she added.

There is solid fundamental support for this round of yuan appreciation, Zhu believes. The obvious resilience of the Chinese economy, the stable trade surplus, and the improving macro environment create the foundation for the yuan’s strong run in the medium to long run.

However, he warned that the market does not need to overestimate the short-term appreciation space because appreciations that are too fast often carry multiple risks. Exports are one of the core engines of China’s economic growth, thus a too-fast yuan appreciation would suppress export competitiveness and drag down economic growth momentum, he explained.

Regarding the issue of balancing the financial positioning, competition, and collaboration between Shanghai and Hong Kong, Zhu clarified that Shanghai focuses on the onshore financial market, the domestic real economy, onshore assets, and onshore exchange rate business, is building itself into a domestic asset management and wealth management center, and connects the domestic market with global markets.

Meanwhile, Hong Kong is a world-leading offshore yuan center, and this core positioning will remain stable in the long term, Zhu added.

Editor: Futura Costaglione