A quiet revolution is underway in global finance: China’s accelerated push to elevate the yuan is not merely symbolic, but aimed at carving out a space for a genuine multipolar currency order. As confidence in the dollar shows signs of strain, Beijing’s manoeuvres to internationalise the yuan signal that the international monetary balance may be shifting. Yet the rise of the Chinese currency will not be abrupt or absolute; it will be a calibrated, domain-by-domain climb. China’s economic scale, payment architecture, financial deepening, and geopolitical outreach together afford the yuan a credible route to becoming a major international currency.
The heft of China’s economy gives it a natural claim to any new global currency architecture. With annual trade volumes exceeding 40 trillion yuan and sustained export strength, trade counterparties have little choice but to deal in or alongside China’s currency. As economist Gerard Lyons has noted, gradual appreciation of the RMB can enhance its credibility without upending export competitiveness. Rising global demand for Chinese goods means suppliers and buyers will increasingly accept settlements in the Chinese currency to reduce exchange risk and transaction costs.
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China’s supply chain domination
China remains central to global supply chains and value chains. Its dominance in electronics, batteries, solar, telecom, and advanced manufacturing ensures that many upstream and downstream players must interact financially with China. That embeddedness provides leverage to promote the Chinese currency in invoicing, settlement, and financing.
Over time, as bilateral trade in Asia and with the Global South grows, yuan denominated invoicing may become standard, reducing reliance on the dollar. Thus, China’s scale and centrality in global trade supply the natural demand base around which yuan internationalisation can expand.
Payment architecture and de-dollarisation
A key strength of the yuan’s international ascent lies in China’s determination to construct parallel payment and settlement infrastructure, reducing reliance on dollar-based systems such as SWIFT. The Cross-Border Interbank Payment System (CIPS), often described as China’s answer to SWIFT, now boasts over 1,700 participating banks — a 33 per cent jump since the war in Ukraine — with clearing banks established in 33 jurisdictions including Turkey and Mauritius. This network allows many transactions to bypass dollar corridors entirely.
Beijing has further encouraged state-owned firms to prioritise yuan in overseas expansion, pushing for RMB use in cross-border credit and settlement via CIPS and blockchain enhancements. At the Lujiazui Forum, PBOC Governor Pan Gongsheng explicitly linked the expansion of digital yuan (e-CNY) and CIPS to a broader multi-polar currency system aimed at reducing overreliance on the dollar.
These architectural moves amount to a deliberate de-dollarisation strategy: not simply rhetorical, but institutional. As China’s payments rails deepen, counterparties will find it easier—and safer—to transact in yuan. This systemic shift offers the Chinese currency a strong structural advantage in emerging markets and trade corridors.
Bond, futures, and hedging infrastructure
For the yuan to be credible internationally, it must offer instruments for hedging, investment, and reserve accumulation. Here Beijing is actively closing gaps.
China recently permitted qualified foreign investors to trade 16 additional futures and options contracts on the mainland (covering commodities such as rubber, tin, lead), expanding hedging tools and improving the linkage between RMB and commodity pricing systems. Such expansions strengthen the incidence of yuan influence in global commodity and financial risk management.
Still, reforms are needed. Only about 2.7 per cent of China’s interbank bond market is held by foreign investors as of mid-2025, and the Chinese currency still accounts for only 2.69 per cent of allocated central bank reserves globally. Observers emphasise that China must “fix its bond market” — improving liquidity, regulatory transparency, and access — to facilitate reserve buying and global portfolio allocation.
The logic is clear: broader and deeper yuan-denominated capital markets make the currency more investible. Over time, as RMB bonds become safe, liquid, and widely accepted, central banks and investors will have the tools and confidence to hold yuan as part of their reserve portfolios.
Rising forex share, reserve shift, commodity deals
Evidence is already mounting that the Chinese currency is creeping into the fabric of global finance. The yuan’s share of global foreign-exchange trading recently climbed to 8.5 per cent in 2025 (from 7 per cent in 2022) according to the BIS triennial survey. Concurrently, in the second quarter of 2025, IMF data showed the yuan and Australian dollar each gained 0.03 percentage points of global reserves, while the dollar lost ground (dropping to 56.32 per cent).
In the energy arena, Russia is increasingly demanding payments in yuan for crude: this has led even India to purchase large quantities of RMB to settle its Russian oil trade, indirectly boosting RMB circulation. Such moves accelerate the positioning of the Chinese currency as a trade and commodity currency.
Yet the pace is modest. The yuan’s global central-bank reserve share has also occasionally dipped (e.g. to 2.1 per cent in early 2025). Nevertheless, incremental gains reflect shifting preferences and financial realignments. Over a decade, these small gains can aggregate, especially if the structural architecture supports them.
The currency trilemma: stability, control, and credibility
The ascent of the Chinese currency is not frictionless. China faces a classic currency trilemma: it must balance (i) exchange-rate stability, (ii) monetary autonomy, and (iii) capital mobility. Pursuing full convertibility risks volatility; locking the currency entirely stifles international use.
Beijing currently favours a managed float against a basket and intervenes where needed to avoid overshooting volatility. But to win trust, markets expect credible signals of a stronger renminbi over the medium term: a gradual appreciation, backed by disciplined macro policy, would enhance RMB credibility without destabilising growth.
Internal challenges exist: weak consumer demand, potential deflation, and high savings rates demand reform to rebalance growth from investment to consumption. A more credible domestic macro framework will buttress external claims. In addition, geopolitical risks and China’s rule-of-law concerns will always temper full adoption. As BCA Research cautioned, China must improve transparency and institutional confidence for the yuan to win deeper trust.
The yuan’s latent ascent is underway
China’s strategy is not to overthrow the dollar, but to create a parallel architecture in which the yuan competes credibly in specific domains — payments, commodity settlements, trade corridors — while preserving policy autonomy and stability.
The rise of a truly international yuan will be gradual, contested, and domain-specific. But the Chinese economy provides it the ingredients: scale, trade centrality, payment architecture, and financial market depth. As global appetites for de-dollarisation grow, the yuan can expand its role not by displacing the dollar outright, but by establishing a parallel, credible alternative.
In the coming decade, central banks and sovereign wealth funds will increasingly evaluate whether to hold yuan, especially in Asia, Africa, and energy corridors. The question will not be whether the yuan will replace the dollar, but how large a footprint it can carve—and how resilient that footprint becomes. Given China’s determined strategy and deep economic foundations, the yuan’s rise as an international currency is not fantasy but plausible projection.