Long journey, first steps

ECONOMY: "The first step towards a global currency: Long limited to China, the RMB can now be used for international trade settlement," by Isabel Ding, China International Business, June 2009.

A description of the pilot project (five cities: Shanghai, Guangzhou, Shenzhen, Zhuhai and Dongguan--I've now visited two) in which key pillars in the economy are able to settle their cross-border trade in RMB.

Basic rationale: too much value lost in dollar between time deal signed and payment made. Plus, if the yuan continues to appreciate, then settling in RMB (another name for the currency being renminbi) protects as well.

Did not know: China let the RMB be used for trade settlement in the late 1990s with eight neighbors (Vietnam, Mongolia, Laos, Nepal, Russia, Kyrgyzstan, the DPRK, and Kazakhstan). That trade is now worth RMB23 billion (like $3-4B).

Now the global financial crisis incentivizes China to do even more, to include the currency swaps totaling $100B.