China has pushed on a number of fronts to make its currency more global, such as opening up its investment markets and encouraging foreign-based wealth and investment management firms to do onshore business in the country.

China’s drive to boost the yuan, aka renminbi, as a global reserve currency has been underlined by a report about the Asian giant’s Belt and Road initiative.

Former Chongqing mayor Huang Qifan reportedly (South China Morning Post, 13 September) told a financial forum in Xian in north-western China that the yuan’s share of global payments was limited and the country must redouble efforts to increase the currency’s use in countries that signed up for the massive infrastructure plan.

The yuan accounted for about 2 per cent of global reserves and 1.76 per cent of cross-border payments by the end of June, Huang said, adding: “It’s not commensurate with our country’s status as the world’s largest foreign trade country.”

He said that the yuan should be used as much as possible in pricing, settlement, receipts and payments and reserves.

China has pushed on a number of fronts to make its currency more global, such as opening up its investment markets and encouraging to foreign-based wealth and investment management firms to conduct onshore business in the country, for example. The renminbi is now part of the Special Drawing Rights Basket system of the International Monetary Fund. There are contrary pressures from US-China trade disputes over tariffs and intellectual property rights. 

So far, China’s drive to expand international use of the renminbi in investment has been constrained by its capital controls.

But the internationalisation drive is taking on fresh urgency as threats of US financial sanctions loom.

Zhang Xiaohui, former assistant governor of the People’s Bank of China, said that China should be more aggressive in expanding the yuan’s reach, by signing more bilateral currency swap agreements with other central banks and making foreign donations or loans in yuan, the SCMP reported. She also said that China must reinforce cross-border payment infrastructure and yuan clearing and settlement services, while also reducing reliance on the Belgium-based SWIFT system.