Yuan trade finance rises in Hong Kong as firms seek cost efficiencies amid US-China tensions
The Chinese currency’s cheaper funding costs and growing offshore liquidity, coupled with a new facility, are boosting its appeal
The use of the yuan in trade finance is gaining momentum as companies seek cost efficiencies and supply chain diversification amid US-China tensions and improvements in the currency’s offshore liquidity, according to top financiers in Hong Kong.
“We have seen rising interest from corporates for [yuan] trade finance since 2023 following the US dollar rate hikes,” said Wu Bin, head of trade and working capital sales for Citi in Japan, North Asia and Australia.
The trend continued last year after China lowered interest rates further, he added, noting an increasing number of mainland companies with an international presence prefer using the yuan for trade finance to address foreign currency fluctuations and for cost efficiencies.
The yuan’s cheaper funding costs are expected to persist, as the gap with the US remains wide because of the slower-than-expected interest rate cuts by the Federal Reserve.
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Carmen Chan, Standard Chartered’s head of trade and working capital for Greater China and North Asia, said the yuan’s use in trade finance was gaining momentum, particularly among companies in sectors such as electric vehicles, solar panels and engineering, procurement and construction.
