(29 August 2024 – Hong Kong) China’s Renminbi use in international transactions has reached record highs in 2024 off the back of rising trade with Russia to retain its status as the fourth most active currency for global payments by value, with a share of 4.7 percent.
In July 2024, 53 percent of China’s inbound and outbound FX transactions were RMB denominated according to data from the State Administration of Foreign Exchange, up from 40 percent in July 2021. bolster Beijing’s efforts to internationalise its currency and cut dependence on the US dollar.
Globally the RMB is still ranked a distant second to the greenback for trade financing. Swift’s RMB Tracker reveals overall, RMB payments value increased by 13.4 percent year-on-year, whilst in general all payments currencies increased by 10.3 percent.
Beijing’s previous efforts to internationalise the RMB wavered after the People’s Bank of China (PBoC) implemented a full scale currency devaluation in 2015 to alleviate stagnant economic growth. Growth of trade settled in RMB has also been supported by newly installed currency swap lines Beijing opened in 2023 with commodity producing countries China is closely aligning to such as Saudi Arabia, Argentina and Mongolia.
“I think it’s very unlikely that we’ll see China’s trade with the United States, with the European Union, moving into Chinese currency, China is not seeking to topple the dollar’s global dominance. That comes with a lot of responsibility and accepting certain vulnerabilities. China’s motives here are primarily about autonomy and resilience” said Syracuse University and Atlantic Council Senior Fellow, Professor Daniel McDowell for FT.
“The sanction situation created a huge stimulus for China to develop its financial system and to develop solutions to link China’s system with the Russian one” said Carnegie Institute Research Fellow, Alexandra Prokopenko.