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In the first three quarters, cross-border receipts and payments of RMB reached 38.9 trillion yuan
Published:
2023-10-31
The ability of cross-border RMB business to serve the real economy has been enhanced, the function of RMB financing currency has been enhanced, and trading in the offshore RMB market has become more active... The "2023 RMB Internationalization Report" (referred to as the "Report") released by the People's Bank of China recently shows that since 2022, the internationalization of RMB has made steady progress, showing a series of new progress and new changes. In the next stage, on the basis of market-driven and independent business choices, we will adhere to reform and opening up and mutual benefit and win-win results, balance development and security, promote the internationalization of the RMB in an orderly manner, and promote high-quality development and high-level opening up.
The ability of cross-border RMB business to serve the real economy has been enhanced, the function of RMB financing currency has been enhanced, and trading in the offshore RMB market has become more active... The "2023 RMB Internationalization Report" (referred to as the "Report") released by the People's Bank of China recently shows that since 2022, the internationalization of RMB has made steady progress, showing a series of new progress and new changes. In the next stage, on the basis of market-driven and independent business choices, we will adhere to reform and opening up and mutual benefit and win-win results, balance development and security, promote the internationalization of the RMB in an orderly manner, and promote high-quality development and high-level opening up.
Cross-border RMB business is better able to serve the real economy. In the first three quarters of this year, cross-border yuan receipts and payments amounted to 38.9 trillion yuan, up 24 percent year-on-year. Among them, the proportion of RMB cross-border receipts and payments in goods trade accounted for 24.4% of the total cross-border receipts and payments in domestic and foreign currencies in the same period, an increase of 7 percentage points year-on-year, the highest level in recent years.
"In recent years, domestic and foreign business entities have continued to increase their demand for renminbi in related businesses. In this context, the increasing convenience of RMB in cross-border trade and investment supports the enhancement of cross-border RMB business's ability to serve the real economy." Ming Ming, chief economist of CITIC Securities, said in an interview with China Trade News that the significant increase in the proportion of renminbi cross-border receipts and payments in goods trade to the total cross-border receipts and payments in domestic and foreign currencies in the same period is closely related to the cross-border renminbi policy support. For example, the central bank and the State Administration of Foreign Exchange support the cross-border fund settlement of new offshore international trade, and encourage banks to give priority to RMB loans in their overseas loan business.
At the same time, with the introduction of policies such as overseas loans by domestic banks and domestic bond issuance by overseas institutions, the RMB investment and financing environment has continued to improve, and the function of RMB financing currency has been enhanced. SWIFT data show that since February 2023, the yuan's share of global payments has risen month by month, rising to 3.71% in September, ranking fifth. In September 2023, the RMB accounted for 5.8% of global trade finance, up 1.6 percentage points year-on-year, ranking second.
In addition, trading in the offshore renminbi market is more active. By the end of 2022, the balance of RMB deposits in the main offshore market was about 1.5 trillion yuan, returning to a historical high. According to the 2022 survey of the Bank for International Settlements (BIS), the share of RMB foreign exchange trading in the global market has increased from 4.3% to 7% in the past three years, ranking fifth.
"Since the beginning of this year, the internationalization of the renminbi has made positive progress, and its payment, investment, financing and reserve functions have been steadily improved." Specifically, the position of the renminbi in the international payment system is increasingly stable, and its market share is basically maintained at more than 2%. As of the end of September, the renminbi ranked fifth in the market share of international payments, with a reading of 3.71%, the highest since 2010; Under the influence of European and American liquidity tightening, the financing attribute of RMB is prominent; As the internationalization of RMB continues to advance and global central banks seek to diversify their reserves, the function of RMB as a reserve currency has been enhanced, and its proportion in global foreign exchange reserves has further increased.
The report of the 20th National Congress of the Communist Party of China proposed to promote a high level of opening-up, which mentioned "orderly promotion of the internationalization of the renminbi." Ming Ming said that RMB internationalization and high-level opening up complement each other. Taking high-quality joint construction of the "Belt and Road" as an example, on the one hand, including the continuous expansion of trade in services and goods between the People's Republic of China, through the "panda bond" and other diversified financing methods, the establishment of RMB financing Windows, etc., from different dimensions of payment, investment, financing and reserves to help RMB internationalization; On the other hand, the continuous deepening of the internationalization of RMB will help improve the recognition of RMB assets by foreign investors, which will further promote the related businesses of opening up to the outside world.
It is worth noting that from January to September this year, the cross-border RMB receipts and payments between China and countries jointly building the Belt and Road reached 6.5 trillion yuan, an increase of 19 percent year-on-year. By the end of September 2023, China had signed bilateral currency swap agreements with 30 Belt and Road countries, and established RMB clearing arrangements in 17 Belt and Road countries.
"The Belt and Road Initiative has laid a regional foundation for RMB internationalization. "The Belt and Road Initiative and the internationalization of the renminbi are mutually reinforcing." Guan Tao, global chief economist of Bank of China Securities, said that the internationalization of RMB generally follows the three-step path of "peripheral - regionalization - globalization" from the space point of view, and the "Belt and Road" has opened up the Asia-Pacific and European economic circles from both sea and land, accumulated rich experience in the development of RMB regionalization, and created historical opportunities for the RMB to globalization. The joint construction of the Belt and Road will help China and co-co-countries strengthen economic and trade exchanges and cooperation in cross-border trade, investment and financing, infrastructure construction, energy and other fields, foster diversified demand for RMB, and promote the international use of RMB. In turn, the steady advancement of RMB internationalization is also conducive to promoting the construction of the "five links" of the "Belt and Road", promoting the facilitation of the "Belt and Road" trade, investment and financing, and industrial cooperation, expanding the development space of domestic industries, and supporting the high-quality development of the real economy.
Clearly stated that in the future, the internationalization of RMB requires the all-round improvement of payment, investment, financing and reserve functions. First, gradually realize the further expansion of clearing and settlement of international trade and investment, including encouraging the People's Bank of China to establish clearing arrangements with more central banks/monetary authorities, expanding the scale of currency swaps, and promoting high-quality international cooperation such as the Belt and Road Initiative and the RECP; Second, make full use of new technologies such as digital RMB to facilitate cross-border RMB settlement and RMB internationalization; Third, we will strengthen macro-prudential management and supervision capacity for full-caliber cross-border capital flows, and promote RMB convertibility under the capital account in an orderly manner. Fourth, vigorously build and develop offshore financial markets, including the improvement of Hong Kong's offshore market and the financial opening and innovation of Hainan Free Trade Port.
The report said that in the next stage, the People's Bank of China will take the facilitation of service trade and investment as the fundamental goal, further consolidate the institutional foundation of cross-border RMB business, strengthen the coordination of local and foreign currencies, and improve the convenience and operability of policies. We will continue to promote the institutional opening of the financial market, and continue to improve the cross-border fund management policies and arrangements for international investors to invest in domestic bonds and stocks. We will enhance the function of the RMB as a financing currency and encourage financial institutions to actively carry out cross-border trade financing and overseas loans. We will foster a sound environment for the international use of the RMB, strengthen monetary cooperation with countries and regions with close economic and trade ties with China, and support the orderly and healthy development of the offshore RMB market. We will improve the macro-prudential management framework for cross-border capital flows that integrates local and foreign currencies, and ensure that the internationalization of the RMB moves forward steadily while maintaining the bottom line of safety.
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