Cross-border Renminbi (RMB) transactions have seen remarkable growth in the first nine months of the year, marking a significant expansion of 24 percent year on year, according to the People’s Bank of China. This surge in cross-border RMB activity, which amounted to 38.9 trillion yuan (approximately 5.42 trillion U.S. dollars), has played a vital role in bolstering the real economy.
One notable highlight of this report is the substantial increase in cross-border goods trade settled in RMB. This accounted for 24.4 percent of the total cross-border goods trade, settling in both domestic and foreign currencies. This is an impressive uptick of 7 percentage points from the previous year and represents the highest level recorded in recent years.
The growing prominence of the RMB as a financing currency is evident in various policy changes and developments. The report underscores the introduction of policies related to practices such as overseas lending by domestic banks and domestic bond issuance by overseas institutions. These initiatives have contributed to the improvement of the RMB investment and financing environment.
Offshore RMB markets have witnessed heightened activity, as reflected in the balance of RMB deposits on the main offshore markets, which stood at approximately 1.5 trillion yuan at the close of 2022. This figure not only demonstrates a resurgence but also reaches a historic high, signifying the robust performance of offshore RMB markets.
The People’s Bank of China, recognizing the pivotal role of cross-border RMB transactions in supporting economic growth, has pledged to work towards facilitating trade and investment. Additionally, efforts will be directed at enhancing systems and infrastructure related to RMB cross-border investment, financing, and transaction settlement. These measures are aimed at fostering the continued healthy development of the offshore RMB markets.
In conclusion, the substantial growth in cross-border RMB payments and receipts reflects the currency’s increasing importance on the global stage. As it continues to serve the real economy and expand its reach in international trade, the RMB’s role in global finance is likely to become even more pronounced in the coming years.