Renminbi's global trade rise is quiet but significant

The Chinese renminbi is steadily increasing its influence in global trade, with its share in international trade financing quadrupling since 2020 to reach 8% in 2026. While the US dollar still dominates, accounting for 81% of goods and services payments in March, the renminbi has solidified its second-place position, surpassing the Euro.

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We observe this rise of the renminbi for about ten years, when the Chinese government launched its Belt and Road Initiative plan in 2013.

Economists attribute this rise to China's long-term strategy, initiated with the Belt and Road Initiative in 2013. This ambitious program aimed not only to build infrastructure but also to promote the internationalization of the yuan. Initially, China focused on being paid in renminbi for its exports, but the trend has reversed, with China now increasingly settling its raw material purchases in its national currency, even when these commodities are typically traded in dollars.

The expansion of payment infrastructures, such as the Cross-Border Interbank Payment System (CIPS) launched in 2015, has further supported this growth. CIPS, seen as a competitor to SWIFT, has found particular traction with countries facing international sanctions, like Russia, which has become a significant user of the renminbi for bilateral transactions.

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At first, the country, which is the largest exporter of goods, mainly asked for its products to be paid in renminbi. Now, the movement goes both ways. China is now striving to settle purchases of raw materials in its national currency, even though these products are generally traded in US dollars.

Geopolitical factors are also playing a crucial role. As countries seek to reduce their reliance on the US dollar, they are increasingly collaborating with China. This shift is evident in the growing use of the renminbi for trade by regions including Hong Kong, Pakistan, Brazil, the Gulf states, Southeast Asia, and Africa. Experts suggest that Chinese companies are also actively negotiating with Western partners to conduct transactions in renminbi, thereby reducing exchange costs.

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Due to the geopolitical changes we are observing, some countries are trying to reduce their dependence on the dollar and collaborate more with China.