China Challenges Dollar Hegemony... Expanding Yuan as a Payment Method

Former Chinese Official Urges Accelerated Use of Belt and Road Initiative and Yuan Internationalization
Increase Yuan Settlement Share to Counter US Financial Sanctions Threats

[Asia Economy Beijing=Special Correspondent Jo Young-shin] There is a call to fully leverage China's 'Belt and Road (一帶一路)' initiative and accelerate the internationalization of the yuan.

According to the Shanghai Securities News on the 14th, Huang Qifan (黃奇帆), former mayor of Chongqing Municipality and vice chairman of the China Center for International Economic Exchanges, stated at an economic forum held in Xi'an on the 12th, "When conducting trade with Belt and Road partner countries, the yuan should be used as the settlement currency as much as possible," adding, "The expansion of yuan usage should be promoted to accelerate the internationalization of the yuan."

Vice Chairman Huang said that by the end of last year, China had signed currency swap agreements with 21 Belt and Road cooperation countries and established bilateral clearing and settlement systems with eight countries.

He pointed out that the current share of the yuan in international payment transactions is only 1.76%, emphasizing that this is not commensurate with China's status as the world's largest trading nation.

[Image source=Yonhap News]

He also reiterated that the proportion of yuan in foreign exchange reserves held by Belt and Road partner countries should be actively increased.

Huang, a prominent Chinese economic official, currently serves as an advisor to the Chinese government and is regarded as a figure who actively represents China's stance externally.

Fang Xinghai (方星海), vice chairman (deputy minister level) of the China Securities Regulatory Commission, said at a public forum in June, "The internationalization of the yuan is to cope with external financial pressures in the future," calling it "an unavoidable task."

The Hong Kong South China Morning Post (SCMP) reported on the same day, "Due to strong capital account controls, China's efforts to internationalize the yuan in trade and investment over the past decade have achieved little success," adding, "As the threat of U.S. financial sanctions intensifies, China is driving forward the internationalization of the yuan."

China is attempting to change the dollar-centered order, focusing on Belt and Road countries. It is currently promoting a plan to create an alternative payment system to the Society for Worldwide Interbank Financial Telecommunication (SWIFT) by involving Russia and India, whose combined population reaches 3 billion.

The introduction of China's legal digital currency is also expected to be an important means for the internationalization of the yuan.

China is devoting efforts to the internationalization of the yuan, such as settling payment in yuan for the import of 3 million barrels of crude oil from British petroleum company British Petroleum (BP) in July.

This content was produced with the assistance of AI translation services.