China wants to use the platform offered by the group of Brics to increase its economic influence in the world.
At the summit in New Delhi, the China Development Bank will offer its four partners loans denominated in Renminbi, the Chinese currency. So far, the China Development Bank lent them only in dollars. In return, it suggests its partners to do the same with their own currencies. The Chinese want to push the Brics to use their currencies in business transactions, as they do on an experimental basis with other Asian countries, Japan and Singapore.
Currently, these transactions represent just 13% of China’s trade in Asia, says Morgan Stanley. But this figure could rise to 50% from 2015, many would not be unhappy to break the hegemony of the greenback.
The yuan’s internationalization strategy is an extension of China’s trade policy, which relies increasingly on emerging markets. China is in a geographic area where growth remains well above the rest of the world, in both infrastructure and consumption, but since joining the WTO in 2010, the country knows that the low-cost production is not sustainable. If China is at the top of Brics, it is because of the economic weight, not by a deliberate policy. India has a cultural asset that gives it command of English, but a delay in infrastructure, while China, for more advanced infrastructure, facing a challenge because of the language.