A Demand-Side Analysis of Renminbi Internationalisation: The Renminbi in South Korea

As the internationalisation of the renminbi has progressed rapidly in recent years, research on it has also grown considerably. However, most of this research tends to focus mainly on analysing it from the supply side, looking, for example, at China’s economic and political conditions and related policy measures. Meanwhile, the demand side of renminbi internationalisation remains underexplored. This study addresses this critical gap in the literature by providing an in-depth analysis of use of the renminbi in South Korea. It demonstrates that renminbi use in the country is still very limited in both the private and the public sectors. It also finds that neither sector has much intention of increasing its use of the renminbi in the near future, as its costs overwhelm its benefits. These findings suggest that, contrary to many optimists’ anticipation, evolution of the renminbi into a consequential international currency even in East Asia may not be an inevitable outcome for China, despite the country’s spectacular economic rise.