[Source/Observer Network Qi Qian] On April 20th, the survey results released by the International Monetary Institute of Renmin University of China showed that amid questions about the safety and credibility of American assets, both domestic and foreign enterprises are increasingly enthusiastic about using the renminbi for international payment settlements.
According to a report on April 21st by the South China Morning Post, Professor Yang Changjiang from Fudan University stated that Trump's tariff policies have exacerbated the weakening of the US dollar's status, creating favorable opportunities for the internationalization of the renminbi. He pointed out that the recent surge in volatility in the US Treasury market is a "watershed event," which is also "an opportunity we must seize."
On April 20th, the International Monetary Institute (IMI) held a presentation and exchange meeting for the results of the 2024 fourth-quarter Cross-border Renminbi Observation questionnaire, while simultaneously discussing the path of renminbi internationalization under the impact of America's "reciprocal tariff" policy.
According to the released report, in the fourth quarter of 2024, more than six out of ten (approximately 68%) of the surveyed companies engaged in cross-border trade settlement business in renminbi, and over half (53%) of the surveyed companies used renminbi for foreign exchange transactions. Apart from the US dollar, about three out of ten companies reported that their share of renminbi settlement exceeded 50%, and more than six out of ten companies reported that their renminbi settlement share exceeded 10%.
Among them, foreign enterprises stood out as亮点. Data shows that the usage rate of foreign enterprises for cross-border trade settlement in renminbi increased from 68% to 77%.
Steady growth in the usage rate of cross-border trade settlement in renminbi by enterprises in 2024 - Report of the International Monetary Institute
When asked about the reasons, nearly seven out of ten enterprises chose renminbi settlement due to considerations of "asset security," nearly half of the enterprises did so to optimize "risk allocation," and less than four out of ten believed that renminbi had "favorable returns."
When asked about the main risks and difficulties in using renminbi for cross-border trade settlement, more than 40% of the surveyed enterprises said that their "trading partners were unwilling to use renminbi." Some surveyed enterprises also pointed out obstacles to the renminbi playing a larger role internationally, including issues of convertibility, capital controls, and susceptibility to external influences.
Meanwhile, the International Monetary Institute's forecast for the internationalization of the renminbi in the fourth quarter of 2024 was consistent with the results of the previous quarters. The proportion of companies planning to increase renminbi settlement rose from approximately 21.5% in the second quarter to about 23% in the fourth quarter, further increasing to nearly 24% in the first quarter of this year.
The International Monetary Institute concluded that in 2024, the proportion of companies planning to increase renminbi settlement showed a steady upward trend, and the demand for cross-border renminbi settlement by enterprises continued to grow. However, at the same time, the US dollar still dominates, and other international currencies such as the euro and yen are actively expanding their international market shares, forming competitive pressure against the renminbi.
Citing data from SWIFT, the South China Morning Post reported that in March this year, the renminbi maintained its position as the fourth largest payment currency globally, accounting for 4.13%. Meanwhile, the US dollar accounted for the largest share, at 49.08%. According to data from the International Monetary Fund, the renminbi accounts for 2.18% of global foreign exchange reserves, while the US dollar accounts for 57.8%.
In light of the above report, the US stock market has remained volatile. Affected by President Trump's so-called "reciprocal tariff" policy, there has been a panic selling of US Treasury bonds over the past two weeks, with the yield on 30-year Treasury bonds rising by 0.5 percentage points at one point. Ongoing tensions in Sino-US trade have heightened concerns about the possibility of a "decoupling" between China and the US and the worsening global economic situation.
"The sharp rise in volatility in the US Treasury market recently is a watershed event," said Professor Yang Changjiang from Fudan University. Unlike previous periods of turmoil, this time global capital did not flow into the US.
Professor Yang Changjiang further pointed out, "We used to think that trade settlement was the main driver of renminbi internationalization, but now the focus has shifted to whether the renminbi can serve as a safe-haven asset. This is an opportunity we must seize."
Professor Tu Yonghong, from the School of Finance of Renmin University of China and deputy director of the International Monetary Institute, also believes that under the current international situation, the global monetary system may become further diversified, which will be beneficial for the process of renminbi internationalization.
Professor Tu suggested expanding cross-border payments through digital renminbi. She also pointed out that the Chinese government and enterprises should continue to strengthen cooperation with neighboring countries in the industrial chain while advancing the Belt and Road Initiative.
Recently, the risk of international trade wars has intensified, and the global economic turmoil caused by Trump's tariff policies has become even more severe. In just a few weeks, the chaos in US policies has severely undermined trust in the US dollar, the world's reserve currency, over decades.
Changes in yields of US 10-year and 30-year Treasury bonds - Chart by The New York Times
"Confidence in US assets has been shaken," Reuters reported on April 11th. After China introduced multiple rounds of countermeasures, although the US stock market eventually closed higher, safe-haven assets like gold set new historical highs during trading. At the same time, the US dollar weakened, and the sell-off in the US Treasury market intensified, all indicating a lack of confidence in the US market.
The New York Times also pointed out that US Treasury bonds, backed by the credit of the US government, have long been considered one of the safest and most stable markets in the world. However, the performance of the US Treasury market has been quite abnormal. Typically, during times of financial market instability, investors flock to US Treasuries for safety, driving up bond prices and lowering yields. Recently, however, the opposite has occurred.
"Since Trump's election, what we've seen is actually challenging the very foundation of the US dollar as a reserve currency," analyzed Attilio, head of foreign exchange strategy at National Australia Bank. "Almost overnight, the US seems to have lost its safe-haven status."
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