The recent revelation that the London Metal Exchange is polling its members on renminbi denominated contracts has no doubt ruffled the feathers of the occasional blue-blooded patriot, but it is symbolic of an important recognition of the need to foster financial infrastructure. Rather than take it as a capitulation to the East, Britons should embrace the move.
Endless (read droll) debate about recovery/downturn has detracted from what Britain already has. If the LME offers renminbi contracts it will be another signal of the UK’s commitment to sustain and build the soft infrastructure that has kept it’s foothold in the world – finance.
Since 2008, a great deal of political rhetoric has been directed at bringing back manufacturing. This appeals to us as growing our own food and building our own cars seems more worthwhile than bean counting. But this ignores the giant financial machinery that lies behind every new factory, motorway or school.
A lesson from the East
This point is perhaps best illustrated by China and the East’s apparent wanderlust. As well as progress towards an international renmibi trade there has been significant development in the Trans-Pacific Partnership (TPP), a trade agreement between a cluster of countries including Vietnam, the US, Chile and Singapore. Both strategies are aimed at building the soft infrastructure that underpins growth and development.
Further a field, Myanmar, not a country renowned for its astute governance, has seen plans laid for sweeping reform. Earlier this month the central bank floated the kyat, Myanmar’s currency, though in a tight band. The Tokyo Stock Exchange also has plans for a second bourse in the country. Again, these plans underline a recognition of how financial infrastructure can drive economic growth.
Sterling job
Simply put (this is a lazy post) Britons should be gunning for the renminbi; Chinese girls are hot and we want more of them, having remnimbi denominated futures at the LME might help this.
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