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Sylvia Ma

The yuan has strengthened in recent months, with the offshore rate hitting its highest level against the US dollar in more than a year, fuelling forecasts that it could reach as high as 6.8 in 2026.
The currency’s international profile has also inched upwards as Beijing pushes for wider global use.
In this explainer, the Post reviews the yuan’s progress across several fronts, drawing on a recent analysis by Betty Wang, head of North Asia research at Oxford Economics.
How far has the yuan advanced internationally?
The yuan has seen a notable rise as a settlement currency in China’s international trade flows – a shift Wang attributed to the “dramatic change in the global geopolitical landscape over the past few years”.
In the first three quarters of 2025, cross-border yuan settlement reached 13 trillion yuan (US$1.85 trillion), up 11 per cent, year on year, accounting for 39 per cent of China’s goods trade over that period – four times the level in 2017, before the first US-China trade war.
But the currency’s broader global footprint remains limited. Daily transactions cleared through China’s Cross-Border Interbank Payment System average about 700 billion yuan (nearly US$100 billion) – sizeable, but still small compared with the nearly US$2 trillion routed each day through the US dollar-based Clearing House Interbank Payments System, Wang said.
On the investment side, yuan-denominated debt issuance in international markets continues to lag behind other major currencies, accounting for just 0.8 per cent of the global market share despite modest gains in recent years.
In terms of global reserve allocation, IMF data cited in the Oxford Economics analysis shows that while the US dollar’s share fell to 56.3 per cent by the end of the second quarter of 2025 – down from 58.9 per cent at the end of 2020 – the yuan’s share also slipped, to 2.1 per cent from 2.3 per cent.
What are the main hurdles to global expansion?
The report listed domestic structural constraints holding back momentum, including partial capital controls, a scarcity of safe assets and limited market depth.
More fundamentally, China’s high private sector savings rate reinforces a chronic current account surplus, limiting demand for imports and constraining the currency’s global circulation, Wang said. This weakens incentives for foreign firms to use the yuan for invoicing.
Outside China, established reserve currencies such as the US dollar and the euro retain liquidity and institutional credibility. Alternatives such as gold and digital assets, including stablecoins, are also gaining traction – potentially at the yuan’s expense.
Given these challenges at home and abroad, yuan internationalisation would likely remain “gradual and incremental”, according to the analysis.
What can be expected on the policy side?
The author noted that geopolitical considerations increasingly shape Beijing’s yuan strategy, marking a shift from earlier economic goals – such as reducing exchange rate risks and developing domestic markets – towards limiting sanctions exposure and strengthening financial sovereignty.
The path outlined for the Chinese currency in proposals for the 15th five-year plan also “marks a departure from the more cautious stance” of the previous blueprint, she added.
In the near term, Beijing is expected to prioritise expanding yuan-based trade settlement and invoicing through deeper regional agreements, while widening yuan financing pilots, improving offshore liquidity and product offerings, and continuing to upgrade market infrastructure and regulation.
Over the medium to long term, Wang said the yuan’s internationalisation would hinge on domestic reforms, including greater financial market transparency, rules-based policymaking and a gradual reduction in China’s structurally high private savings rate to support more durable global demand for the currency.


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Currency sees wider use in trade, but high domestic savings and partial capital controls still act as constraints, analysis shows


Currency sees wider use in trade, but high domestic savings and partial capital controls still act as constraints, analysis shows.


What China’s yuan internationalisation push looks like – and what may hold it back

.css-1c6uqr6{color:inherit;font-weight:inherit;font-size:inherit;font-family:inherit;line-height:inherit;overflow-wrap:break-word;}Currency sees wider use in trade, but high domestic savings and partial capital controls still act as constraints, analysis shows

How far has the yuan advanced internationally?

Currency sees wider use in trade, but high domestic savings and partial capital controls still act as constraints, analysis shows