Part 7/11:
Concurrent with defending its currency at home, China is actively promoting the yuan abroad. Recently, the PBOC increased the required share of yuan in cross-border trade transactions from 25% to 40%, signaling a push to internationalize its currency. While compliance is voluntary and non-mandatory, non-compliance affects banks’ regulatory standings, subtly encouraging broader usage.
This strategy is bearing fruit—about 30% of China’s trade was settled in yuan as of January, with that number steadily climbing. China’s approach aims to make the yuan more integral to global trade, challenging the dominance of the US dollar. This tilt towards yuan-based trade is part of China's long-term vision of creating a more balanced and resilient global financial architecture.