China may have a convertible currency by 2015 according to reports in the state-run press and comments made to European Union officials in Beijing. If it happens, it would mean that the yuan would become fully convertible by 2015, in a move that will likely boost the flailing euro and dollar currently struggling with the under-valuated Chinese currency.
Davide Cucino, the head of the EU Chamber of Commerce in China, reported at a press conference (September 8) that Chinese officials informed the European business community in Beijing that the yuan would attain “full convertibility” by 2015 in a gradual process.
Adviser to the Chinese Central Bank Li Daokui confirmed Friday (September 9th) at a trade fair in southeastern Xiamen that while the timetable is to be determined, it is “quite possible,” for the yuan to reach full convertibility by 2015, adding that “there should be big progress,” in this regard.
While the convertibility timeline has found believers among Asian currency experts, Western financial experts are skeptical, warning that China has made such promises before. Monish Mahurkar of the Asian Development Bank said it is “not beyond imagination,” that the yuan would become at least partially convertible by 2015. John Lee, adjunct professor at the Centre for International Security Studies, wrote in the Wall Street Journal that “Promises of full currency liberalization are designed to deflect American and European angst about China's currency policies ahead of the Group of 20 meeting next month,” and that “Beijing is in no position to deliver.”
The yuan is held within strict margins by the People’s Bank of China and set at a daily trading rate each morning, a policy which has long prompted criticism from Europe and the United States who say it affects their respective exports. The yuan has also limited conversion for investment purposes, and a fully convertible currency would mean it could become a reserve currency alongside the dollar and euro and a major player in global trade. A convertible yuan is a condition the US and Europe are demanding of China before the yuan can join to the International Monetary Fund’s currency basket.