Second, RMB internationalization may induce exchange rate appreciation, due to
nonresidents’ demand for RMB-denominated assets, and may depress the PRC’s trade
competitiveness. The more popular a currency becomes, the more likely it is that a
certain degree of appreciation will occur. For domestic consumers, currency
appreciation represents a benefit, but for producers and exporters, the effect of RMB
appreciation will be negative, because the competitiveness of exports and importcompeting industries will be damaged. Reserve-issuing entities such as the European
Union, Japan, and the United States all had similar experiences, at least in the early
stages of their internationalization (Maziad et al. 2011).