In an effort to strengthen its position in the global financial system and decrease its dependency on the US dollar, China is actively promoting the use of the yuan and its own payment system in international trade, this initiative coincides with rising trade tensions with the US and a desire to protect itself from any restrictions the US may place on access to the dollar-based financial system.
The plan jointly released by the Shanghai municipal government, the People Bank of China PBOC, and the country financial regulators, seeks to leverage Shanghai role as a global financial hub to promote the yuan, especially in trade involving countries in the Global South, the strategy involves several key components, including encouraging state-owned enterprises to prioritize the yuan for cross-border payments and settlements.
China intends to improve the Cross-Border Interbank Payment System (CIPS), a substitute for the SWIFT network, in order to support this transition, China hopes to offer a competitive alternative to the dollar-dominated financial system by extending the global reach of CIPS and guaranteeing effective processing for cross-border transactions in yuan, in order to lower financing costs in yuan and increase trade transactions in the Chinese currency, the PBOC is also pushing Shanghai's commercial banks to increase their cross-border loan offerings.
China is investigating the incorporation of blockchain technology in addition to fortifying its payment infrastructure in order to improve the efficiency and security of international transactions, in an effort to encourage the adoption of yuan-denominated price benchmarks in important international markets, the central bank has also promised to assist the Shanghai Gold Exchange in establishing alliances with foreign trading platforms.
Belt and Road Initiative, which aims to increase Chinese economic and political clout in Asia, Africa and Latin America, is one of Chinese larger strategic goals that is in line with drive for yuan internationalization, China aspires to create a more competitive international environment and fortify its position in international trade networks by encouraging use of the yuan in partnerships.
China has already made strides in increasing the use of the yuan in cross-border trade. According to the People's Bank of China, total cross-border yuan payments and receipts increased 21.1% year-on-year to 41.6 trillion yuan (US$5.9 trillion) between January and August of 2024. In March 2025, the yuan's share of global payments reached 4.13%, ranking it as the fourth most active currency for global transactions. Furthermore, data from China's foreign exchange regulator indicates that the yuan's cross-border usage reached a record $724.9 billion in March 2025, accounting for 54.3% of all cross-border transactions in China.
China is also looking into using its electronic RMB, or e-CNY, for cross-border transactions,Ten ASEAN countries and six Middle Eastern countries will fully integrate the digital RMB cross-border settlement system, according to a March 2025 announcement by the People's Bank of China, in addition to reducing dependency on conventional payment methods, this action might hasten the yuan's internationalization.
Even while the US dollar still dominates international trade, Chinese attempts to advance the yuan are a reflection of its desire to have a bigger say in the global financial system, in order to challenge the dollar hegemony and become a significant force in international banking, China plans to improve its payment infrastructure, promote transactions in yuan, and use its economic might, but issues like convertibility and confidence still prevent a broader use of Yuan.
The plan jointly released by the Shanghai municipal government, the People Bank of China PBOC, and the country financial regulators, seeks to leverage Shanghai role as a global financial hub to promote the yuan, especially in trade involving countries in the Global South, the strategy involves several key components, including encouraging state-owned enterprises to prioritize the yuan for cross-border payments and settlements.
China intends to improve the Cross-Border Interbank Payment System (CIPS), a substitute for the SWIFT network, in order to support this transition, China hopes to offer a competitive alternative to the dollar-dominated financial system by extending the global reach of CIPS and guaranteeing effective processing for cross-border transactions in yuan, in order to lower financing costs in yuan and increase trade transactions in the Chinese currency, the PBOC is also pushing Shanghai's commercial banks to increase their cross-border loan offerings.
China is investigating the incorporation of blockchain technology in addition to fortifying its payment infrastructure in order to improve the efficiency and security of international transactions, in an effort to encourage the adoption of yuan-denominated price benchmarks in important international markets, the central bank has also promised to assist the Shanghai Gold Exchange in establishing alliances with foreign trading platforms.
Belt and Road Initiative, which aims to increase Chinese economic and political clout in Asia, Africa and Latin America, is one of Chinese larger strategic goals that is in line with drive for yuan internationalization, China aspires to create a more competitive international environment and fortify its position in international trade networks by encouraging use of the yuan in partnerships.
China has already made strides in increasing the use of the yuan in cross-border trade. According to the People's Bank of China, total cross-border yuan payments and receipts increased 21.1% year-on-year to 41.6 trillion yuan (US$5.9 trillion) between January and August of 2024. In March 2025, the yuan's share of global payments reached 4.13%, ranking it as the fourth most active currency for global transactions. Furthermore, data from China's foreign exchange regulator indicates that the yuan's cross-border usage reached a record $724.9 billion in March 2025, accounting for 54.3% of all cross-border transactions in China.
China is also looking into using its electronic RMB, or e-CNY, for cross-border transactions,Ten ASEAN countries and six Middle Eastern countries will fully integrate the digital RMB cross-border settlement system, according to a March 2025 announcement by the People's Bank of China, in addition to reducing dependency on conventional payment methods, this action might hasten the yuan's internationalization.
Even while the US dollar still dominates international trade, Chinese attempts to advance the yuan are a reflection of its desire to have a bigger say in the global financial system, in order to challenge the dollar hegemony and become a significant force in international banking, China plans to improve its payment infrastructure, promote transactions in yuan, and use its economic might, but issues like convertibility and confidence still prevent a broader use of Yuan.
