Internationalization of the Renminbi:

The internationalization of the Yuan is a goal that China set out to achieve in the long term since its financial reform began. At that time he lacked the conditions to face it, although it can be said that, step by step, his actions have been directed in that direction. Strengthening it, for example, is a necessary management for that purpose. Recently, concrete, experimental and gradual measures have been adopted for this purpose, aimed at extending its use both in commerce and in finance, mainly in investments.

Although on a smaller scale, the other initiative with a view to internationalization is the development of investment opportunities in RMB in the country and the promotion of Chinese investment in yuan abroad, which is another step towards the liberalization of the account capital.

Use of the Yuan in foreign trade transactions:

It is logical that the internationalization of the RMB begins with the extension of its use in international trade, taking into account that foreign trade represents for China about 29.4% of its current GDP valued in dollars and more than 10% of the world trade.

The strategy was started as an experiment in July 2009, with a pilot program that included a group of exporters and importers from five Chinese cities that were authorized to use the national currency in transactions with the special administrative regions of Hong Kong, Macao and the member countries of the Association of Southeast Asian Nations (ASEAN), with the objective of limiting dependence on the US dollar and promoting the reach of the Yuan in other regions.

Subsequently, the program was expanded both within China and to the rest of the countries that wanted to join the scheme. In 2010 it was extended to 20 Chinese provinces and the authorization was extended to 100% of importers and 30% of exporters.

In order to facilitate these transactions, China has signed bilateral swaps or exchange agreements so that central banks in other countries could sell Yuan to local importers of Chinese goods. Agreements of this type have been signed with South Korea, Hong Kong, Malaysia, Belarus, Indonesia, Argentina, Iceland and Singapore, Japan, among other countries.

There is also a set of special swaps agreements with Russia, Brazil, and Turkey that allow these countries to denominate part of their bilateral trade flows in their respective national currencies.

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