Third time lucky? China's push to internationalise the renminbi

November 2, 2023--This paper analyses China's different attempts to internationalise its currency and how they have fared.
Executive summary
Western concerns that the renminbi could rival the dollar as an international currency contrast with underwhelming numbers in terms of global settlements in renminbi and with the experience of China's two main previous failed attempts to achieve renminbi internationalisation.

However, China is moving towards a more realistic plan for renminbi internationalisation, focusing on China's strengths in trade and financing.

China is now the main trading partner for a very large number of countries and has become a major creditor for a good part of the Global South. This, together with the increasingly frequent restrictions on the use of the dollar, is strengthening the renminbi.

The cross-border use of the renminbi for trade settlements and financing (Chinese banks' overseas loans denominated in renminbi and official renminbi swap lines offered by the People's Bank of China) has been on the rise since 2022, coinciding with Russia's invasion of Ukraine and the related Western sanctions.