Why China’s growing global investments could spur yuan internationalisation push
As firms expand overseas, rising investment demand and appetite for yuan assets and swap agreements may prompt Beijing to take action
“Chinese companies are showing strong momentum in expanding their overseas investments, so I believe the Chinese government will take more enabling measures [to support transactions],” said Xiang Songzuo, former chief economist at the Agricultural Bank of China.
He added that the internationalisation of the yuan is being driven more by business demand than by Beijing pursuing it “for its own sake”.
Currently, Chinese companies require government approval for overseas direct investment, as Beijing maintains strict capital controls to limit outflows – even as it encourages international use of the currency.
Why China’s growing global investments could spur push for yuan internationalisation
As domestic firms look to expand their global footprint, Xiang said he expects Beijing to gradually accelerate efforts to facilitate the flow of the yuan.