Benefits and challenges of constructing China-ASEAN foreign exchange markets

What are China's benefits and challenges in constructing the foreign exchange markets (forex) with ASEAN? China-ASEAN Free Trade Area launched in January 2010 creates both opportunities and challenges in all aspects for China, political as well as economic. This paper illustrates the status quo, benefits and challenges in constructing the forex between RMB and the currencies of ASEAN, incorporating the development trends of China-ASEAN economic and financial cooperation as well as the requirements of the strategy of internationalization of the RMB, from a China point of view. As compared with the status quo, five economic benefits and four main challenges are generally expected to accrue to China from pushing the China-ASEAN forex construction. We propose some strategies and methods to construct the long-term effective China-ASEAN foreign exchange markets mechanisms based on the analysis.