number of adepts of the Chinese currency is ever-growing in its process
of internationalisation. After gaining support in Pacific Asia and
Europe by installing clearing centres and permit the investment of
financial assets denominated in yuan, now Canada, the United States’
long-time ally, breaks its resistance and is called upon to become the
platform of «yuan-ization» on the American continent.
by Ariel Noyola Rodríguez
yuan has become one of China’s components of «soft power» (ideological,
cultural and diplomatic means that a country uses to influence the
actions of the actors in the international system) to gain support of
the countries most aligned with the US foreign policy.
time its annual growth is situated around 7% and the profitability
prospects in the Special Economic Zones are exhausted rapidly, China
looks for ways to transform the terms of its economic relationships with
the demand for high value added projects from Chinese costumers is on
the rise, hundreds of occidental entrepreneurs show more interest in
increasing trade with the Asian giant.
to the growing importance of China in capital flows (direct foreign
investment, portfolio investments, etc.) and global trade, the influence
of the yuan as a medium of payment, instrument of investment and
reserve currency grows in parallel in more and more places in the global
same is happening in Canada, the country that is incorporated into the
North American Free Trade Agreement (NAFTA) with Mexico and the United
States. Surprisingly, the Canadian prime minister, Stephen Harper, does
not only have any objections to the internationalisation of the yuan, on
the contrary: he does not spare any effort to turn Toronto into the
main platform of the Chinese currency outside Pacific Asia.
the Chinese government at first had the privilege of being able to use
the «people’s currency» (renminbi) as the only country in Asian
territory, later on the yuan rose above its continental limits and came
to Latin America, Africa, the Middle East and Europe.
the case of the American continent, until the end of last year the
internationalisation of the yuan was limited to the establishment of
bilateral swap agreements (currency swaps) with the central banks of
Brazil and Argentina (the two biggest economies in South America).
it is true that China started talking to senior officials of the
Uruguayan government in order to turn Montevideo into the «Latin
American capital of the yuan» ,
there have not yet been initiated more projects orientated at
encouraging the use of the Chinese currency in Latin American and the
Canadian government, however, managed to concrete three important
agreements over the course of the last six months. In the first place,
both countries agreed to install the first RMB Offshore Clearing Bank to
facilitate the use of the Chinese currency on the American continent.
Before that, these centres were only implemented in Asia and Europe.
the supervision of the Industrial and Commercial Bank of China (ICBC)
based in Toronto, the direct cost centre enables convertibility
operations between the Canadian dollar and the Chinese currency without
having to bear in mind the market rates of the US dollar, which permits
reducing the costs of transaction and forger closer ties between the
companies from both countries through the exchange of goods and
to estimations elaborated by the Canadian Chamber of Commerce, the
Canadian companies will be able to save approximately 6.2 billion US
dollars over the course of the next decade, thanks to the implementation
of the RMB Offshore Clearing Bank. As a consequence, the amount of
exportations will unprecedentedly reach a total between 21 and 32
billion US dollars.
the People’s Bank of China and the Central Bank of Canada subscribed
for a currency swap with agreed maturity of three years for a total of
30 billion Canadian dollars (200 billion yuan).
the Federal Reserve System (Fed) concluded its quantitative easing
programmes, various countries suffered from depreciation of their
currencies with respect to the US dollar: the same happened to Japan and
member states of the Euro zone, just like advanced export countries of
commodities such as Australia and Canada and, of course, the economies
of the periphery with the most financial frailties.
the US government has increasingly resisted to tolerate appreciation of
the dollar because of the adverse effect on the economic growth. It is
enough to remember that the Fed raised the voices of its critics against
the accommodative monetary politics of the European Central Bank (ECB)
and the Bank of Japan in the weeks before.
Therefore, everything seems to indicate that the tensions between currencies will increase during the coming months .
By means of the swap agreement, China and Canada abandon the use of the
US dollar and thereby reduce the effects of exchange rate volatility in
bilateral trade flows and investment.
the end, the Chinese government granted an investment quote with a
maximum of 50 billion yuan (8.2 billion US dollars) to Canadian
entrepreneurs in order to participate in the Renminbi Qualified Foreign
Institutional Investor program (RQFII)  .
way, Canadian investors have the endorsement of the Chinese regulatory
authorities to buy financial assets denominated in yuan, like already
had happened with entrepreneurs based in London, Paris, Frankfurt and
a doubt, the cooperation agreements between China and Canada have had
excellent result, both with respect to the trade perspectives and
investment in Canadian companies as to crediting to the
internationalisation of the yuan in North America boosted by Canada.
an inevitable consequence of the growing importance of Pacific Asia in
North America, the yuan currently occupies the 2nd place (10.2%) in the
ranking of most used currencies by Canada in its transactions with China
and Hong Kong: it is used 8.5 times more than the US dollar (1.2%) and
is only surpassed by the Canadian dollar (75.4%).
to the Society for Worldwide Interbank Financial Telecommunication
(SWIFT), Canadian corporations increased their Yuan-denominated
operations by 213% in comparison to 2013 in March 2015 .
enthusiasm that the Chinese currency has stirred up in Canada is so big
that there will be held a financial summit about Pacific Asia in the
Vancouver convention centre on 16 June. The summit is sponsored by City
AgeMedia, AdvantageBC and the province of British Columbia .
meeting of academics and members of the business elite is looking for
ways to build new frameworks of collaboration with China in order to
implement the use of the yuan in more Canadian cities than Toronto
(among them Vancouver, Montreal and Calgary) and, at the same time,
proportion training sessions to exporters and importers so that maximum
efficiency of the agreements made in November 2014 can be obtained .
conclusion, while President Barack Obama fails in his attempt to tear
down the triumphs of Xi Jinping’s government on a global scale, the
Chinese consolidate the process of «yuan-ization» in the «back yard» of
the White House, armed with Canada as a «Trojan horse».
ROLAND SAN JUAN was a researcher, management consultant, inventor, a part time radio broadcaster and a publishing director. He died last November 25, 2008 after suffering a stroke. His staff will continue his unfinished work to inform the world of the untold truths. Please read Erick San Juan's articles at: ericksanjuan.blogspot.com This blog is dedicated to the late Max Soliven, a FILIPINO PATRIOT.
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