Renminbi reforms will be another false dawn

China’s fear of liberalisation of its currency is a sign of its immense economic vulnerabilities. Genuine liberalisation of the renminbi is not imminent because the conditions that have prevented it have not changed.

Rumours that the economic leadership under Premier Le Keqiang sees liberalisation of the Chinese renminbi as a top priority are on the march again, if the viewpoints of prominent Chinese economists and international bankers are to be trusted. Yes, we have heard these before and various ‘liberalisation’ measures have been somewhat underwhelming and involve only allowing the RMB to trade within a 1 per cent band of the prescribed exchange rate vis-à-vis the American dollar dominated ‘basket of currencies’ that the Chinese Central Bank pegs the RMB against.

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