Can China make the renminbi a global currency?

Chinese banks are expanding cross-border use as Beijing keeps capital controls.

China has made progress in expanding the renminbi’s international use, but low yields, limited convertibility and thinner onshore liquidity could keep it from rivaling the US dollar.

Foreign institutions remain less comfortable holding the renminbi as a reserve asset because China’s onshore liquidity is far thinner than the US Treasury market, Alicia Garcia Herrero and Haoxin Mu, economists at Natixis Corporate & Investment Banking (Natixis CIB), said in an August note.

Hedging instruments that let investors manage currency risks are also scarce, they added.

“Its currency is also not fully convertible, so it cannot supply renminbi to the world by either current, or an open capital account,” Garcia Herrero and Mu wrote.

Low renminbi yields are also likely to discourage investors, they said.

China has therefore taken a different route to internationalising its currency, using trade settlement and cross-border funding from Chinese banks to push the renminbi abroad.

Chinese authorities set their ambition to make the renminbi a global currency like the US dollar, British pound or euro in March 2009.

Seventeen years later, China is building payment, custody and trading infrastructure to support renminbi transactions outside the dollar system, the economists said.

“The result looks less like the internationalisation of a currency but more like the construction of an alternative monetary system for the renminbi’s cross-border use: one in which Chinese banks supply, Chinese corporates absorb, and Chinese infrastructure clears,” they said.

Garcia Herrero said in a separate Natixis note published on 11 August that the traditional path taken by the US dollar, British pound and euro involved opening capital markets, running external deficits, and letting nonresidents accumulate the currencies.

China could not and would not follow that route, she pointed out.

“So it has pushed the renminbi outward by other means—trade settlement and credit extended by its own banks,” Garcia Herrero said.

The strategy has produced some results. Garcia Herrero said the renminbi is now the world’s second-largest currency for trade finance and has become one of Asia’s cheapest funding currencies.

In a March 2026 interview with Asian Banking & Finance, Vina Cheung HSBC’s global head of RMB internationalisation set expectations for the renminbi to play a bigger role in the global financial system.

Cheung said that  the investment flow between China and the rest of the world to continue, and will make the renminbi one of the good options for cross-border settlements and investments.

Demand for alternatives to the US dollar could provide another source of support, she said.

“That is Beijing’s bet—that the desire to move away from the dollar will outweigh these frictions for at least some official holders,” Garcia Herrero said.

But broader international use would require China to give investors greater access to its financial markets, she said.

“It requires ceding control—over prices, over exit, over the capital account itself—and convincing others the control will not be reasserted the moment it becomes inconvenient,” she said. “But, of course, control is what Beijing refuses to give up.”

Questions to ponder

• Can China’s alternative monetary system attract enough demand to become sustainable?
• Will the renminbi ever become a truly international currency?
• What role can Chinese banks play in taking the renminbi global?