Editor’s note: Lin Nan is a deputy director and associate research fellow of the International Finance and International Economics Research Office at the Institute of Finance & Banking, Chinese Academy of Social Sciences. The article reflects the author’s opinions and not necessarily the views of CGTN. It has been translated from Chinese and edited for brevity and clarity.
The internationalization of the Chinese renminbi, also known as the yuan, has made steady progress. Cross-border renminbi receipts and payments reached 39 trillion yuan ($5.4 trillion) in the first three quarters of 2023, up by 24 percent year on year. The figure for the full year of 2022 stood at 42 trillion yuan, marking a year-on-year increase of 15 percent.
In retrospect, cross-border renminbi receipts and payments expanded from less than 10 billion yuan in 2009 to over 12 trillion yuan in 2015 and nearly 16 trillion yuan in 2018. Since then, the cross-border use of renminbi has steadily grown. Although the year-on-year growth rate has decreased over the past five years, the average annual growth rate remains high at 37 percent.
With enhanced cross-border renminbi payment function, cross-border renminbi businesses and services have gained a stronger ability to support the real economy, financial opening-up, and better serve the Belt and Road Initiative.
In the first three quarters of 2023, the cross-border renminbi receipts and payments between China and the Belt and Road partner countries amounted to 6.5 trillion yuan, accounting for 16.7 percent of the total cross-border renminbi payments during the same period.
Efforts should be made to further enhance the efficiency of renminbi clearing and settlement, and pursue new heights in the construction of financial infrastructure, such as the China International Payment System (CIPS), in a safe and efficient manner.
The international status of the renminbi is gradually solidifying. Regarding the currency’s financing function, according to SWIFT (Society for Worldwide Interbank Financial Telecommunication) data, as of the end of the third quarter of 2023, the renminbi’s share in global trade financing was 5.8 percent, ranking second in the world.
As for foreign exchange market transactions, BIS (Bank for International Settlements) data shows that over the past three years, forex transactions in the renminbi have risen to the fifth place in global market share.
In terms of the currency composition of the allocated forex reserves worldwide, the renminbi is ranked the fifth among major reserve currencies globally.
According to IMF (International Monetary Fund) data, as of the end of the second quarter of 2023, the proportion of renminbi forex reserves held by central banks worldwide is approximately 2.5 percent, showcasing a slight decline from its historical peak in 2022.
Furthermore, the People’s Bank of China has signed currency swap arrangements with central banks or monetary authorities of 40 countries and regions, demonstrating the gradual emergence of network effects in the international use of renminbi.
To ensure the high-quality and sustainable development of renminbi internationalization, it is essential to continuously improve the system of prudent macro management, strengthen risk prevention while expanding openness, and steadily and prudently promote renminbi internationalization in an orderly manner.