The internationalization of the yuan keeps improving along with the promotion of the China-proposed Belt and Road Initiative (BRI), which shows that confidence in China’s economy is growing despite the ongoing China-US trade war, analysts said.
“Chinese financial institutions have established more than 10 subsidiaries in Africa, and eight countries including South Africa have included the yuan in their foreign reserves,” Vice Commerce Minister Qian Keming told a press conference on June 4.
China has established yuan settlement arrangements with Zambia, and local currency swap agreements with four countries including Morocco, Qian said.
De-dollarizing has become a trend, analysts said. Given decades of cooperation, China has won Africa’s trust, so it is reasonable for these countries to choose to include the yuan in their foreign reserves, Dong Dengxin, director of the Financial Securities Institute at the Wuhan University of Science and Technology, told the Global Times on Tuesday, June 4.
Yuan internationalization will proceed faster due to US unilateralism and bullying. “US protectionism and its so-called ‘America First’ policy have put the world’s economy under a threat, no matter whether it’s the European developed countries, or other developing countries,” he said.
In contrast, as the world’s second-largest economy, China’s unswerving opening-up policy and years of high-quality economic growth have offered a secure shelter for the rest of the world, and including the yuan in foreign reserves shows countries’ trust in China, Dong noted.
“The BRI has been a great platform for the yuan’s internationalization thanks to massive trade settlements that are involved for the currency,” Tan Xiaofen, deputy head at the School of Finance at the Central University of Finance and Economics, told the Global Times.
More than 60 foreign central banks or monetary authorities have included the yuan in their official foreign reserves, including Singapore, Russia and Australia, media reports said.
According to Czech media on May 30, the Czech Republic’s central bank confirmed that it has decided to adopt the yuan as a reserve currency.
Qian said that new business models have been developing rapidly under the framework of the BRI, such as cross-border e-commerce. For example, Chinese e-commerce giant Alibaba has announced the joint development with the Rwandan government of the first global e-commerce platform in Africa.
Trade between China and Africa reached $204.2 billion in 2018, up 20 percent year-on-year, and China has been the largest trading partner of Africa for 10 consecutive years, Qian told the press conference.