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Alice Li

China may take additional steps to advance the yuan’s internationalisation and ease cross-border flows on the back of rising investment demand, according to a prominent economist.
“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.


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.
“As long as the investments are legitimate, [the government] will certainly support companies that want to go overseas,” Xiang said.
He also predicted China’s central bank would maintain a steady approach to the yuan’s exchange rate, avoiding sharp rises or declines.
China is expected to be very clear and determined in advancing the internationalisation of the yuan
Xiang Songzuo, former chief economist at Agricultural Bank of China
“I think this is the right approach – to keep the currency exchange rate relatively stable and avoid sharp fluctuations,” Xiang said. “This approach could also be applied in future.”
Capital account settlements – including securities investment and overseas direct investments – made up most of China’s cross-border yuan settlements last year. According to a Bank of China report, these totalled 47.8 trillion yuan (US$6.71 trillion), accounting for 74.6 per cent of the total, which stood at about 64.1 trillion yuan.
China’s outbound direct investment reached US$192.2 billion in 2024, up 8.4 per cent from the previous year and ranking third globally, government data showed.
Beyond demand from mainland companies, offshore investors also seek yuan-denominated assets, particularly in Hong Kong where interest in equities, bonds or other financial derivatives remains strong, Xiang said.
“But currently, there isn’t enough supply of such products in the Hong Kong market.”
“Based on this, whether it’s in the 15th five-year period or over the longer term, China is expected to be very clear and determined in advancing the internationalisation of the yuan”, Xiang said, noting that more products would likely be introduced.
Many mainland-based companies are now encouraged to list in Hong Kong, where investors can use the “dual counter model”, introduced in 2023, to trade selected stocks in either Hong Kong dollars or yuan, he added.




Xiang said he also expects Beijing to expand currency swap agreements with more central banks and increase the size of existing swap lines. This would meet overseas demand for the yuan – including for investment, trade or travel – in regions such as Africa, Europe and the Americas, he added.
Under these arrangements, businesses in countries like Brazil can directly convert local currencies such as the real into yuan, making it easier to trade with China without relying on the US dollar as an intermediary.
In its proposals for the 15th five-year plan released in late October, Beijing updated its language to explicitly state its aim of “advancing the internationalisation of the yuan”, compared with its previous stance of “prudently and steadily advancing” it.
The proposals also called for the further opening of yuan capital accounts and the development of a secure cross-border yuan payment system, as part of Beijing’s push to become a financial powerhouse.
Additional reporting by Sylvia Ma


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As firms expand overseas, rising investment demand and appetite for yuan assets and swap agreements may prompt Beijing to take action


As firms expand overseas, rising investment demand and appetite for yuan assets and swap agreements may prompt Beijing to take action.


Why China’s growing global investments could spur yuan internationalisation push

.css-1c6uqr6{color:inherit;font-weight:inherit;font-size:inherit;font-family:inherit;line-height:inherit;overflow-wrap:break-word;}As firms expand overseas, rising investment demand and appetite for yuan assets and swap agreements may prompt Beijing to take action

As firms expand overseas, rising investment demand and appetite for yuan assets and swap agreements may prompt Beijing to take action