With the US continuously hammering down on China with reciprocal tariffs–the highest amongst Trump’s recent tariff sweep, the Asian superpower has announced plans to use its currency–the yuan–as a form of payment for international transactions. Said move is considered a bold move from China to challenge the trade status quo of using US dollars in global transactions, cementing itself as a worthy player in the international trading economy.
Positioning China as a True Global Financial Hub
A report from the South China Morning Post notes that the plan, authored by the Shanghai municipal government, the People’s Bank of China and the country’s financial regulators, sought to capitalise on Shanghai’s status as a leading international financial centre to advance the adoption of the Chinese yuan, particularly in trade with nations across the Global South.
Moreover, the plan mentioned that Shanghai plans to strengthen the Cross-Border Interbank Payment System (CIPS) capabilities — China’s counterpart to the global SWIFT payment system — and will persist in broadening its international reach and network coverage.
Chinese authorities expect that this policy, which would allow Beijing to bolster its influence within global trade networks, will allow it to conduct a greater share of transactions through its currency and payment infrastructure.
Moreover, this will mitigate the impact of any future attempts by the United States to restrict its access to the dollar-dominated financial system.
Central Bank Encouragement
Following the release of said policy, the People’s Bank of China (PBOC) posted an online notice encouraging commercial banks in Shanghai to increase cross-border credit activity to reduce yuan financing costs for businesses and boost imports and exports conducted in the Chinese currency.
The PBOC also stated its intention to enhance the development of CIPS, explore the integration of blockchain technology, and offer secure, efficient settlement and clearing services for international trade, shipping, investment, and financing transactions denominated in yuan.
Moreover, the central bank stated that it would back the Shanghai Gold Exchange in forging partnerships with international exchanges and promoting the broader adoption of yuan-based benchmark pricing across major global markets.
Support from Chinese Enterprises
The policy also mentioned strengthening financial backing for Chinese enterprises expanding abroad in support of the country’s Belt and Road Initiative. The goal is to empower market participants to compete and collaborate internationally in a more secure, efficient, and accessible environment.
It also outlines that Shanghai will encourage state-owned enterprises involved in outbound investment to prioritise using the yuan for cross-border payments and settlements, thereby contributing to the currency’s broader integration into the national economy.
Additionally, the plan highlights the creation of customised services to promote yuan usage in sectors such as Silk Road e-commerce, advanced maritime logistics, large-scale equipment exports, and support services for Chinese employees working overseas.
It also emphasises the importance of increasing renminbi adoption in Belt and Road partner nations and establishing a Shanghai-based trade and investment service platform to facilitate the global circulation and usage of the Chinese currency.
The Yuan’s Role in the Global Stage
As of this month, the Chinese yuan (renminbi) continues to solidify its position on the global financial stage, reflecting China’s strategic efforts to elevate its international economic standing. In March, the yuan accounted for 4.13% of global payments, ranking fourth worldwide, with cross-border usage reaching a record £545.43 billion ($724.9 billion)—over half of China’s international transactions.
These initiatives are part of China’s long-term strategy to position the yuan as a viable alternative in the global financial system, particularly amid rising trade tensions and protectionist policies. While the US dollar remains dominant, China’s concerted efforts signal a shift towards a more multipolar currency landscape.
These moves are not only about monetary influence—they’re part of a broader campaign to establish China as a financial and geopolitical counterweight to the United States, gradually reshaping the global economic order. Still, trust, transparency, and convertibility remain key hurdles to broader yuan adoption.
