Media: The Chinese Yuan is Very Popular in Africa

According to Bloomberg, Zambia has become the first African country to allow Chinese mining companies to pay taxes in yuan, but this may not be the last, as Beijing is seeking to internationalize the yuan and reduce its reliance on the US dollar.

This measure announced by Zambia last month represents "another success for China in promoting the use of its currency in Africa," as Beijing is Africa's largest trading partner.

According to Bloomberg, Kenya had previously converted part of its debt to China into yuan. This portion of the debt was previously denominated in US dollars.

Ethiopia is also discussing taking similar measures with Beijing.

In this context, Gato Kayumbwa, an advisor to Zambian President Hakainde Hichilema, emphasized the importance of using the yuan to Bloomberg, as he said, "It can protect the country from American political shocks."

"We certainly value the US dollar, which is a reserve currency, but the more we rely on the dollar, the greater the exchange rate fluctuation risks we face," Kayumbwa said.

The Zambian model is replicable.

Bloomberg cited Theodor Sel's words that Zambia announced on December 31 that Chinese companies could pay taxes in yuan, "which represents a model that China is seeking to replicate in Africa."

Sel explained that Beijing seeks to "eliminate" the monopoly existing in the global financial system structure, referring to the dominance of the US dollar in international exchanges.

He added that African countries are moving toward what he described as a "multilateral monetary policy," which will strengthen China's strategic position in Africa and its relationship with its most important trade partners in Africa.

Bloomberg pointed out that the yuan currently accounts for only 2% of global currency reserves, highlighting the important role Africa plays in China's efforts to enhance its global status and reduce dependence on the US financial system.

Beijing is the main creditor to African countries, including Zambia, and also one of the largest buyers of many African products.

Shared Benefits

Bloomberg's report explains that promoting the use of the yuan in Africa would bring benefits to both China and Africa at a time when Washington is trying to use the dollar as a weapon against its rivals through sanctions and other restrictions.

Bloomberg emphasized concerns about the dominance of the US dollar after the US Department of Justice filed charges against Federal Reserve Chair Jerome Powell.

According to Bloomberg, many believe this move was an attempt by the Trump administration to pressure the Federal Reserve to lower interest rates, threatening the Fed's independence and undermining confidence in dollar-denominated assets.

According to Bloomberg, although China has not applied "explicit pressure" on African governments to increase the use of the yuan, efforts by Beijing to enhance the international status of the yuan have strengthened since China called for a strong currency in early 2024 to make China a "financial power."

The interest rate on yuan loans is about 200 basis points lower than that on US dollar loans, which is an important attraction for investors.

China is the world's largest exporter, which helps promote the use of the yuan in international trade financing. According to data provided by the People's Bank of China, the share of the yuan in global trade has risen to about 7%.

Source: Bloomberg

Original: toutiao.com/article/1854888747484232/

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