China’s Dr. Jekyll and Mr. Hyde’s relationship with the world continues
While China’s yuan may hardly be reckoned or considered as an international reserve currency yet, they certainly have been moving towards that direction coming from the trade and investment aspect.
From Reuters.com, (bold mine)
Pakistan will join a growing list of central banks that will invest in China's interbank market as the world's second-largest economy opens its capital markets.The People's Bank of China announced on Monday that it had signed an agreement with the State Bank of Pakistan to help Pakistan invest in its local debt market, without providing details about the size of the investment programme.China has allowed foreign central banks to invest in its domestic interbank bond market since 2010 as part of efforts to widen investment avenues for foreign yuan asset holders and promote the international use of the Chinese currency.China and Pakistan signed a three-year currency swap deal worth 10 billion yuan ($1.60 billion) in December 2011 and companies in the two countries are encouraged to accept export and import bills in Chinese yuan.The central banks of Japan, South Korea, Singapore, Thailand, Hong Kong and Indonesia are among those who invest in China's bonds onshore.
China’s record gold imports could also signify as part of the process aimed at attaining international currency reserve status.
But of course the most important dynamic will be in the trade and investments dimensions; where the yuan/renminbi may be used for trade and financial flows from which may motivate China’s trading partners to hold the yuan/renminbi as reserves for their banking and financial institutions.
This why China’s foreign policy based on gunboat diplomacy over territorial claims has been inconsistent with her currency status goals.
For me, this implies that her present appearance of militancy could be a smokescreen for what seems as undeclared political interests working behind the scenes.
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