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Yuan Surpasses Dollar as Most Widely Used Currency in China’s Cross-Border Transactions
1 May 2023
EIRNS—China’s yuan became the most widely used currency for cross-border transactions in China in March, surpassing the dollar for the first time in at least four decades, Reuters reported April 26. Cross-border payments and receipts in yuan rose to a record from $434.5 billion in February to $549.9 billion in March—a growth of $115 billion—according to Reuters’ calculation based on data from China’s State Administration of Foreign Exchange. The yuan surged to 48.4% of all cross-border transactions in China, while the dollar’s share declined to 46.7% in March. It would seem that the yuan’s share of China’s cross-border trade will continue to grow and not be reversed. At the same time, China has reduced its holdings of U.S. Treasury bonds from $1.19 trillion in June 2018, to $867 billion in December 2022, a shedding of $323 billion of its U.S. Treasury holdings, or 27%. Russia is also increasing its cross-border transactions away from dollars and towards other currencies, so that non-U.S. dollar currencies constitute more than half of Russia’s cross-border transactions. China and Russia are reducing their exposure to U.S. threatened or presently applied sanctions on dollar transactions, but also opening pathways to setting the basis for new trade systems outside the dollar, that can be strengthened by plans for new credit lending facilities, such as the potential expansion of the BRICS’ New Development Bank. India, Indonesia and other nations of the Global South are following this track, if not as far advanced yet as either China or Russia. [ref] |