RMB Photo:VCG
The Chinese yuan has maintained a high ranking on a currency internationalization gauge last year, with an annual average of 6.27 points, up 22.9 percent year-over-year, news report shows.
The 2024 Annual Report of Renminbi Internationalization, developed by Chinese Renmin University’s International Monetary Institute, was released on Saturday. It uses the Renminbi (yuan) Internationalization Index (RII) to track the yuan’s progress in trade settlement, financial transactions, and official reserves. A higher RII indicates a greater degree of internationalization.
At the end of each quarter in 2023, the RII values were reported as 5.21, 7.13, 6.42, and 6.32 points, respectively, with an annual average of 6.27 points, up 22.9 percent year-over-year, demonstrating strong momentum in the yuan’s internationalization.
China’s commitment to high-quality economic development and opening-up is bolstering the currency’s global stature.
Despite challenging external situation, the yuan’s internationalization showed strong progress compared to other currencies. As of the end of 2023, the internationalization indexes for the US dollar, euro, pound sterling, and Japanese yen were 51.52, 25.03, 3.76, and 4.40, respectively. The yuan’s index surpassed those of the pound and yen.
China’s high-quality economic development boosts the yuan’s value internationally. Its role in global recovery and stable supply chains promotes global trade cooperation, increasing the yuan’s use in cross-border commerce, experts said.
“Trade growth and the relocation of industries to ASEAN, RCEP countries, Russia and other regions have seen rapid growth. Russia now primarily uses the yuan for cross-border trade settlements,” Tan Xiaofen, a professor at the School of Economics and Management at Beihang University, told the Global Times on Monday.
“Also, China is promoting ‘institutional openness’. Improved policies and regulatory systems not only provide domestic investors with more channels for overseas investment but also attract substantial foreign capital into the Chinese market,” Tan said.
In trade settlement, cross-border yuan settlement reached a record high last year, with the yuan accounting for 4.43 percent of global trade at the year end, a 34.18 percent year-over-year increase, contributing about 30 percent to the RII.
In international financial transactions, yuan used in direct investment grew steadily, as well as in credit loans and bond financing, leading to a 28.80 percent year-over-year rise, contributing about 80 percent to the RII.
Regarding international reserves, the yuan’s share in global foreign exchange reserves declined to 2.29 percent, negatively impacting the RII by about 10 percent.
“Despite facing some external pressures, we are optimistic about the yuan’s internationalization, with China’s status as a leading economy and foreign trade power providing consistent support, Tan said.
In the first half of 2024, China’s foreign trade rose to a new high of 21.17 trillion yuan ($2.9 trillion), a year-on-year increase of 6.1 percent, official customs data showed.
According to SWIFT’s latest report, the yuan accounted for 4.61 percent of global payments by value in June, a 0.14 percentage point increase from May. This is the eighth month in a row that the yuan has held the fourth slot among global payment currencies.
Global Times
