China just smashed another milestone in its war on dollar dominance. Official figures show overseas renminbi lending, bond investments, and deposits by Chinese banks have quadrupled in five years, hitting RMB3.4 trillion (roughly $480 billion).
This is a full-blown, long-term campaign to cut down exposure to the US dollar and force its own currency deeper into global finance.
China’s central planners have made it clear: they want the renminbi to matter on the world stage, especially in trade and sovereign credit.One big reason? U.S. and EU sanctions are targeting Chinese banks for alleged ties to Russian weapons parts.
China is trying to guarantee it can keep trading uninterrupted, no matter what Washington or Brussels do. “From China’s perspective, [settlement in renminbi] is important because it shows that no matter what happens, it can still trade,” said Adam Wolfe from Absolute Strategy Research in London.
China expands bond channels and trade financing to build RMB dominance
According to China’s State Administration of Foreign Exchange, fixed-income assets held by banks outside the country more than doubled over the past decade, jumping to $1.5 trillion, with RMB-denominated assets now at $484 billion. That includes $360 billion in loans and deposits, up from just $110 billion in 2020.
The Bank for International Settlements says renminbi loans to emerging markets spiked by $373 billion between 2020 and 2024.“The year 2022 marked a turning point away from dollar- and euro-denominated credit and towards renminbi-denominated credit,” the BIS said.
Countries like Kenya, Angola, and Ethiopia have already swapped old dollar debts into RMB. Indonesia and Slovenia plan to issue RMB bonds, and Kazakhstan sold RMB2 billion in offshore bonds at a 3.3% yield last month.
The currency’s share of global trade finance jumped from under 2% to 7.6% over just three years, Swift reported, making it the second most-used currency for trade deals behind the dollar. China is leaning into that by growing its web of offshore clearing banks and signing more swap lines with foreign partners.
Chinese customs data shows more than RMB1 trillion in trade is now settled monthly in renminbi. Nearly 30% of China’s trade, and over 50% of all cross-border payments, are now done in RMB. That’s huge.
Beijing builds payments system and opens Hong Kong repo market
While Swift data shows renminbi’s share of global payments has dropped, China’s internal CIPS system is booming. Transaction value has crossed RMB40 trillion every quarter since early 2024. That suggests payments are migrating out of Western systems.
Bert Hoffman, professor at the National University of Singapore, said this proves China’s trying to shift to a multi-currency world. “A dollar-based system is inherently unstable and has disadvantages that a multicurrency system would not have,” Hoffman said.
Still, there’s a problem.
The renminbi only made up 2.1% of global reserves at the start of the year, IMF data shows.Capital controls and lack of usable RMB assets have scared off investors. Beijing’s trying to fix that.
Hong Kong just dropped a “road map” to support renminbi liquidity and bond issuance. Paul Smith from Citi called it “as significant as what Hong Kong did with the stock connect programs.”
At the same time, Beijing opened the interbank repo market to foreign investors, so they can now use RMB bonds as collateral for loans. “It only makes sense for investors to allocate more into these assets if they are able to use them for more than just holding and generating an income,” said Karen Lam from Simmons & Simmons in Hong Kong.
This summer, China also expanded Bond Connect, letting mainland investors buy Hong Kong’s fixed-income products. Smith said this links foreign RMB issuers with a “deep pool of renminbi liquidity.” Beijing isn’t trying to kill the dollar.
They just want the RMB everywhere; quietly, steadily, and permanently. “The policy is moving very gradually, but all of the elements that would make a much more rapid internationalization work — they’re falling into place,” Hoffman said.
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