In the news: RMB joins the IMF club, Chinese accounting aligns with IFRS and China boosts legal ties with Africa
December 01, 2015 | BY
Katherine Jo &clp articles &The IMF accepted the renminbi as a reserve currency, the Ministry of Finance signed an MOU with the IFRS Foundation and the China-Africa Joint Arbitration Centre was launched
The IMF will add the yuan to its basket of reserve currencies, an international stamp of approval of the measures China has taken to integrate into a global economic system that has been dominated for decades by the U.S., Europe and Japan. The renminbi will have a 10.92% weighting in the basket, said the IMF. That compares with 41.73% for the U.S. dollar, 30.93% for the euro, 8.33% for the Japanese yen and 8.09% for the British pound. This is a huge victory for China, which has been making a concentrated effort to dilute the U.S. dollar's hegemony in global trade and finance. It is also an issue of prestige and supports China's ambitions of taking its place alongside the world's great powers. The IMF's approval means that the nation will have to open its capital account further, and that President Xi Jinping will push ahead with reforms. The breakneck pace of changes will mean more tweaks to regulations and laws, and more work for the legal community.
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The Ministry of Finance and the IFRS Foundation signed an MOU on November 18 on the convergence of the Chinese Accounting Standards (CAS) with the International Financial Accounting Standards (IFRS). Both agreed that a single set of high quality global accounting guidelines is a good idea. A few significant differences currently remain: China requires pooling of interest accounting on the combination of state-controlled enterprises, while this is not permitted under IFRS. Also, CAS allows the reversal of impairment losses, which IFRS does not. At present, the different accounting standards including CAS, IFRS and US GAAP can produce considerably different numbers. With more Chinese companies going global and falling under multinational jurisdictions, the need to implement a consistent standard for accounting and reporting revenue is becoming increasingly important.
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Lawyers from China and Africa established the China-Africa Joint Arbitration Centre in Johannesburg, South Africa, as an alternative to solving disputes without going to court. The centre will handle labor, business and government complaints at a time when trade is rising. It will operate in Johannesburg and Shanghai, as well as any other suitable location in Africa when there is a complaint, said chairman Michael Kuper SC. The Forum on China-Africa Cooperation (FOCAC) Legal Forum was also held the same day, where lawyers gathered to discuss best practices and to further legal research and cooperation, as well as reform international guidelines to reflect the needs of developing countries. At the end of the day, these initiatives depend on the effectiveness of courts for regulatory progress and awards enforcement.
More from CLP:
The IMF will add the yuan to its basket of reserve currencies, an international stamp of approval of the measures China has taken to integrate into a global economic system that has been dominated for decades by the U.S., Europe and Japan. The renminbi will have a 10.92% weighting in the basket, said the IMF. That compares with 41.73% for the U.S. dollar, 30.93% for the euro, 8.33% for the Japanese yen and 8.09% for the British pound. This is a huge victory for China, which has been making a concentrated effort to dilute the U.S. dollar's hegemony in global trade and finance. It is also an issue of prestige and supports China's ambitions of taking its place alongside the world's great powers. The IMF's approval means that the nation will have to open its capital account further, and that President Xi Jinping will push ahead with reforms. The breakneck pace of changes will mean more tweaks to regulations and laws, and more work for the legal community.
More from CLP:
The Ministry of Finance and the IFRS Foundation signed an MOU on November 18 on the convergence of the Chinese Accounting Standards (CAS) with the International Financial Accounting Standards (IFRS). Both agreed that a single set of high quality global accounting guidelines is a good idea. A few significant differences currently remain: China requires pooling of interest accounting on the combination of state-controlled enterprises, while this is not permitted under IFRS. Also, CAS allows the reversal of impairment losses, which IFRS does not. At present, the different accounting standards including CAS, IFRS and US GAAP can produce considerably different numbers. With more Chinese companies going global and falling under multinational jurisdictions, the need to implement a consistent standard for accounting and reporting revenue is becoming increasingly important.
More from CLP:
Lawyers from China and Africa established the China-Africa Joint Arbitration Centre in Johannesburg, South Africa, as an alternative to solving disputes without going to court. The centre will handle labor, business and government complaints at a time when trade is rising. It will operate in Johannesburg and Shanghai, as well as any other suitable location in Africa when there is a complaint, said chairman Michael Kuper SC. The Forum on China-Africa Cooperation (FOCAC) Legal Forum was also held the same day, where lawyers gathered to discuss best practices and to further legal research and cooperation, as well as reform international guidelines to reflect the needs of developing countries. At the end of the day, these initiatives depend on the effectiveness of courts for regulatory progress and awards enforcement.
More from CLP:
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