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China expands cross-border use of RMB

By Wang Junling, People’s Daily The Ministry of Commerce and the People’s Bank of China recently jointly released a notice on further supporting foreign economic and trade enterprises in expanding the cross-border use of RMB to facilitate trade and investment. The notice made deployment in supporting RMB settlement for trading in bulk commodities, supporting foreign investors to invest and reinvest in China with RMB, and expanding the use of RMB in overseas economic and trade cooperation zones, so as to nurture a sound environment for the cross-border use of RMB. Market participants generally believe that RMB cross-border investment and financing, as well as settlement, are becoming more stable and convenient as China gains an increasingly closer economic relationship with the world.
To further improve the fundamental institutional system for the cross-border use of RMB helps promote a virtuous circulation of the currency in both onshore and offshore markets, and will enable Chinese and foreign market entities to launch more efficient cooperation for win-win outcomes.
Today’s China is dubbed the “world factory”because it ranks first in the world in the production of 220 types of industrial products. It is also a “world market” that boasts 1.4 billion people and the world’s largest middle-income group. Besides, the country remains the biggest or most important trading partner for more than 120 countries and regions. For many economies, RMB settlement will not only save conversion costs of foreign exchange but also free themselves and their trade partners from fluctuations of exchange rate. A message released by the Argentine Embassy in China on Jan. 9 excited Wang Shicheng, general manager of a foreign trade company in Shanghai. According to the message, Argentina’s central bank announced to expand a currency swap deal with China, which included a special activation of 35 billion yuan to compensate operations on the foreign exchange market. It is learned that Wang and his Argentine partners used to settle in U.S. dollars. However, the high and frequent fluctuations in the exchange rate of the U.S. dollar against the Chinese yuan and the Argentine peso in recent years haveput huge pressure on him and his partners. Therefore, the Chinese businessman and his Argentine partners have always hoped to settle with RMB for their cross-border trade. “At the fifth China International Import Expo held last November, we agreed to import 20 containers of wine from Argentine and French wineries. The further expansion of the use of RMB is definitely good news to us,” Wang told People’s Daily. According to the latest statistics released by China’s State Administration of Foreign Exchange (SAFE), RMB receipts and payments accounted for nearly 50 percent of the country’s cross-border receipts and payments in 2022, up more than 20 percentage points from 2016. Due to high inflation and tight monetary policy in major economies, the U.S. dollar index vaulted to a 20-year high last year while major currencies, including the euro, yen, and British pound plunged to new lows in the past 20 to 30 years, said SAFE spokesperson Wang Chunying. The increasing ratio of the use of RMB in cross-border settlement will help reduce currency mismatch risks in cross-border trade, Wang added. Accroding to Liu Cheng, an associate professor at China’s Nankai University, cross-border RMB settlements related to real economy have kept growing rapidly inrecent years, with bulk commodities and cross-border e-commerce sectors emerging as new areas of growth. Two-way cross-border investment activities were dynamic, Liu added. As the exchange rate of the RMB maintains general stability and bi-directional volatility, the internal demand of market entities for using RMB to avoid exchange rate risks is gradually growing, Liu told People’s Daily. “The notice will help improve the quality of the supply of financial services in the cross-border use of RMB, better meet the demand of market entities under multiple scenarios such as foreign trade, foreign investment, and contracting overseas engineering projects. It will make the ‘cross-border stage’ of RMB much bigger,” Liu said. Today, RMB cross-border settlement has become a choice for more and more enterprises. Tang Hongxia with the international site of, a Chinese online B2B marketplace, said the new measures raised by the notice will further improve the willingness of overseas clients to settle in RMB. “As a matter of fact, compared with the share of RMB in international payment under the Society for Worldwide Interbank Financial Telecommunications and the weighing of the currency in the International Monetary Fund’s currency basket, known as Special Drawing Rights, the proportion of RMB in the global exchange market is still low. It means enterprises still enjoy a huge potential in the cross-border use of RMB,” Liu said.

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