China will use its New Silk Road project stretching from Asia to Europe to boost use of its currency in trade that may total $2.5 trillion in a decade, according to the vice chairman of China Securities Regulatory Commission.
The so-called One Road, One Belt plan will link the world’s biggest user of energy and industrial metals to markets across Asia, Africa, the Middle East and Europe. China’s trade with countries along the route will boost the flow of raw materials and help promote the use of the yuan, said Yao Gang of the CSRC, which regulates the country’s derivatives, futures and commodities trading.
“The commodity market will grab this historic opportunity to help expand trade,” Yao said at a conference Thursday in Shanghai. “Countries along the belt and road have great resources, while China is faced with environmental pressure and increasing dependence on foreign supplies.”
China’s seeking to reinforce trade links as its promotes use of the yuan and open its own markets to international participation. The country vies for the top spot as the world’s biggest oil importer and gold consumer, and is the largest user of everything from industrial metals and iron ore to pork and soybeans.
President Xi Jinping unveiled plans to build a Silk Road Economic Belt and a maritime Silk Road two years ago, referring to an ancient series of land routes and shipping lanes that connected China to the Mediterranean Sea. China has initially set aside $40 billion in a fund last November to finance roads and railways abroad under the plan. Yao said Thursday that China’s trade with countries along the routes could reach $2.5 trillion in 10 years.
The yuan, which floats against the greenback, only accounts for about 1.8 percent of trade settlement globally and recent data have shown its expansion slowing. The International Monetary Fund this week dropped a long-held view that the yuan was undervalued, contradicting the U.S. assessment and strengthening China’s case for the currency to win reserve status at the lender in a coming review.