China ramps up global yuan push

As Chinese President Xi Jinping toured Southeast Asia last month to forge closer ties against higher US tariffs, the People's Bank of China (PBOC) was seizing a moment of confusion and disruption in global trade to promote greater usage of the yuan.

- SAMUEL SHEN TOM WESTBROOK

It won't de-throne the dollar, but as cross-border yuan payments surged to a record in March, analysts say there is renewed appetite for a global yuan as aggressive tariffs shake faith in the US currency and other US assets.

In April, PBOC-controlled financial services firm China UnionPay strengthened its payment network in Vietnam and Cambodia, while the central bank announced steps to promote cross-border yuan settlement and other financial services.

More specifically, the QR-code payments, which UnionPay was promoting in the southeastern countries, should facilitate transactions for tourists and small businesses, reducing reliance on the dollar.

The UnionPay deals build out a network that now extends to more than 30 countries outside China, and represent one end of a push to expand the yuan’s reach as an international trading, spending and investment currency.

At the other end of the push are PBOC’s offshore yuan standby currency swaps with other central banks that hit a record 4.3 trillion yuan (US$591.2 billion) by value in February, cross-border commodity trades settling in digital yuan and efforts to price everything from oil to gold in the Chinese currency.

The moves also highlight China’s desire for a financial architecture independent of the West — and US banks — at an inflection point for markets as US President Donald Trump spurns his own trading partners and drives a scramble to reroute trade.