Impact of RMB Internationalization on China's Competitiveness in Financial Services Trade Based on VAR Model : Evidence from China-Us

The improvement of currency internationalization levels can positively impact the credibility of the national currencies in international economic activities, and expand the effective demand and optimize the supply structure for the country’s financial service trade. In this way, a state may improve its financial service trade competitiveness in the international market. This paper builds a VAR model based on the time series data of China-US financial services trade from 2010 to 2021, analyzes the impact of different quantitative indicators of RMB internationalization on China-US financial services trade from the impulse response results, and verifies the correctness of conclusions through various inspection methods. The results show that the improvement of RMB internationalization helps to narrow the balance of financial services trade between China and the US, but with a significant lag; and thus this effect is heterogeneous in different dimensions, which is specifically manifested in the fact that the development of overseas RMB securities business is more important for the level of RMB internationalization to narrow the China-US financial services balance. At the end of this article, specific countermeasures are put forward. China should focus on developing the international competitiveness of the traditional RMB deposit and loan financial sector, meanwhile the competition in the overseas market of high value-added financial business must also not be neglected. In addition, China needs to put forward more targeted RMB internationalization development policies at different levels in the future, in order to promote high-quality financial services to the rest of world and aid the economic recovery of the world in the "post-pandemic" era