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SCMP Editorial
Editorial
SCMP Editorial

China’s drive to sidestep weaponised Western finance gains speed

Use of a multilateral central bank digital currency platform and a broader panda bond market will help China and other nations reduce reliance on the West

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By late June, total cumulative transactions on mBridge passed 600 billion yuan (US$88.6 billion). Photo: dpa
SCMP Editorial
Editorials represent the views of the South China Morning Post on the issues of the day.
International markets might be the ultimate arbiter of the yuan’s success as a global currency, but Beijing has been giving it rather large pushes. China is developing alternative cross-border financial infrastructure to mitigate risks from US-dominated systems embedded in the world economy.

The authorities are prioritising independent transaction and settlement systems and developing broader and more liquid investment markets domestically. Beijing has tasked mBridge, a multilateral central bank digital currency (CBDC) platform, with becoming such a system. Panda bonds – yuan-denominated debt sold by foreign entities in China’s domestic market – aim to build a deep liquidity pool.

Recent large yuan transfers signal broader strategic efforts to advance usage of the CBDC platform, which enables transactions to bypass the more standard global systems. The dominant Swift interbank network has been used by the United States as a method of sanctions. The mBridge project seeks to reshape cross-border payments by using blockchain technology to enable faster and more secure settlement.

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