China’s yuan could become world’s ‘currency of choice’ by 2050 under dual circulation plan

Market entities will use yuan for cross-border purposes as China’s economy integrates with rest of the world, says ex-deputy central bank governor Hu Xiaolian

China’s dual circulation plan places a greater focus on the domestic market, and is its approach to adapting to an increasingly unstable and hostile outside world

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Under its 14th five-year plan, China is aiming to build a multilayered capital market, and develop the links between domestic and overseas capital markets, which supports the inbound flows of overseas yuan and provides foreign entities a smoother channel for investment and financing. Photo: AP

Published: 10:00pm, 11 Jun 2021Updated: 12:48am, 12 Jun 2021

Amid rising anti-globalisation sentiment and as Western countries intensify their efforts to contain China, the country is entering a period of economic development that will create new infrastructure to enable the global use of the yuan, according to a former deputy governor of its central bank.

As China’s economy integrates with the rest of the world, market entities will use the yuan for cross-border purposes, although under the so-called dual circulation plan, yuan globalisation is ultimately aimed at serving China’s real economy, trade and investment, said Export-Import Bank of China chairman Hu Xiaolian.

By the middle of this century, China might have the world’s biggest, and most open financial market to function with the world’s most inclusive rules and norms promoting international cooperation

Hu Xiaolian

“Now that China is developing a new paradigm characterised by its dual circulation model, the globalisation of the yuan has an even more solid foundation,” Hu said.

“At the end of the day, it is about serving China’s dual circulation model while promoting closer cooperation with the rest of the world.”

China’s dual circulation plan places a greater focus on the domestic market, or internal circulation, and is China’s strategic approach to adapting to an increasingly unstable and hostile outside world.