An Analysis Of RMB Settlement In GMS National International Project

With the implementation of “Road and Belt” policy in China,more and more enterprises concerned with international engineering contracting want to “go out”.Under the background of trade integration and economic globalization,economic cooperation between China and countries in the Great Mekong Sub-region(GMS)has become closer.In so many fields of economic and trade cooperation between China and GMS countries,international engineering contracting is a type of comprehensive economic activity concerning capital,service and technology,etc.,and it is also a major form of economic cooperation carried out between China and GMS countries.In the past decade,economy has been developed rapidly in GMS countries through reforms relating to economic systems,during which the demand for infrastructure construction like highways and railways are relatively high,creating an important opportunity for international engineering contractors in our country to “go out”.For these international engineering contractors,there are many risks in international engineering projects,among which the most serious one is the risk of project settlement.Since exchange rates among different countries change frequently and the settlement cycle is always long,with huge settlement amount,international engineering contractors may suffer from major losses once the exchange rate changes.In such a circumstance,analysis of the currency used in settlement of international engineering project becomes extremely important.For contractors of international projects in GMS countries,how to select the most suitable currency is closely related with the profit of the company,as well as the interest of the country.From the qualitative perspective,it is better to use RMB in the settlement of international engineering projects.From the perspective of enterprises,using RMB in the settlement of international engineering projects helps to prevent currency risk and cut down the cost;from the perspective of our country,it helps RMB to develop worldwide and thus reduce the loss of foreign exchange.From the quantitative perspective,factors that influence RMB settlement amount are analyzed first in the paper,in which it is discovered that the settlement amount of a country's currency as the settlement currency positively correlates with(the percentage of this country's GDP in the world GDP)and(total net credit of the country/the country's GDP),negatively correlates with the volatility of a country's exchange rate and actual interest rate.Through the comparative analysis of the four variables,it is discovered that RMB is a desirable currency for settlement.In terms of the research methods,qualitative and quantitative methods are combined in this paper.Firstly,macro-economic and trade situation of GMS countries and situation of Chinese international engineering projects in GMS countries are introduced and analyzed.On this basis,RMB settlement in international engineering projects is discussed in depth both qualitatively and quantitatively.Advantages of RMB settlement in international engineering projects are analyzed,as well as RMB settlement effects in international engineering projects.Finally,the conclusion is made.It is discovered through research that overseas international engineering projects of China should be settled in RMB since it can help to cut down the cost and prevent currency risks;besides,it is also beneficial to the internationalization of RMB.