China: Yuan's Global Rise 'Irreversible', PBOC Says

Beijing Bets on the Yuan, and on Keeping Its Champions at Home

SHANGHAI - China's financial regulators rarely say anything the market has not already priced in. On Thursday they came close to an exception. In a single press conference, the central bank and the securities regulator set out the two halves of a strategy that will shape Chinese capital markets for the rest of the decade: push the yuan deeper into the world's payment plumbing, and keep the country's most valuable companies listed at home.

Two Regulators, One Message

Lu Lei, a deputy governor of the People's Bank of China, told reporters that the internationalisation of the yuan is "a continuous and steady process, and an irreversible trend." To meet demand from market participants seeking more diverse currency options, he said the PBOC has steadily strengthened the yuan's global monetary functions and its international standing.

The measures he listed are expansionary in every direction. China will increase bilateral currency swap agreements and local-currency settlement, improve the Cross-Border Interbank Payment System (CIPS) that serves as its answer to the Western-dominated Swift network, and widen cross-border use cases for the digital yuan and QR-code payments. Market-access schemes - Stock Connect, Bond Connect and Swap Connect - will be optimised to open the onshore market further.

At the same press conference, Li Chao, vice-chairman of the China Securities Regulatory Commission, said Beijing would push to make the A-share market the primary listing destination for leading domestic companies and "accelerate the development of world-class exchanges." The CSRC, he added, will implement more inclusive systems for share issuance, listings and mergers and acquisitions under the 15th Five-Year Plan, which runs to 2030.

The Scoreboard: Where the Yuan Actually Stands

Lu offered his own scoreboard. The yuan, he said, has become China's top settlement currency for cross-border receipts and payments, the world's second-largest trade finance currency, the third-largest payment currency, and holds the third-highest weighting in the International Monetary Fund's Special Drawing Rights basket.

The external numbers mostly bear him out, with caveats that matter. According to Swift's payment tracker, the yuan accounted for about 3.1 per cent of global payments by value earlier this year, ranking fifth or sixth depending on the month - far behind the dollar at roughly 50.6 per cent and the euro at 21.6 per cent. In trade finance, however, the yuan has climbed to about 8 per cent of Swift messages, ahead of the euro's 5.78 per cent. That is the second-place claim, and it is solid.

The reserve picture is thinner. In the IMF's most recent SDR valuation, the yuan holds a 12.28 per cent weight, third after the dollar (43.38 per cent) and the euro (29.31 per cent), with the next review due by the end of July 2027. But yuan assets make up only about 2.4 per cent of allocated global reserves, its lowest ranking among the major indicators.

Infrastructure tells the more interesting story. CIPS processed roughly 210 trillion yuan in 2025, up from about 175 trillion a year earlier and just 97 trillion in 2022, according to figures cited in industry analyses. It now counts more than 160 direct and 1,500 indirect participants across more than 110 jurisdictions. Chinese data show the digital yuan has been used in 3.48 billion transactions worth about 16.7 trillion yuan, or US$2.37 trillion, through November last year. Roughly 30 per cent of China's cross-border trade is now settled in its own currency, and 34.4 per cent of exporters and importers hedged foreign-exchange exposure in the first five months of 2026, up 4.5 percentage points from a year earlier.

Hong Kong First, Then London, Singapore and Dubai

The offshore map Lu sketched is deliberately hierarchical. Hong Kong is to be reinforced as the "premier" offshore yuan hub, while London, Singapore and Dubai are encouraged to develop their own tailored niches. Shanghai, meanwhile, is to be deepened as a global centre for yuan asset allocation and risk management - the language used in the PBOC's own 2026-2030 reform plan, published on August 10.

That strategy is already producing products. Hong Kong Exchanges and Clearing listed five-year Chinese government bond futures on August 3, the only such contracts in the offshore market, handing international investors a hedging tool they had long requested. Shanghai's cross-border yuan receipts and payments reached 32.4 trillion yuan, or US$4.7 trillion, in 2025, up 9 per cent and equal to 46 per cent of the national total.

The Listing Pivot and Hong Kong's Exposure

The second half of Thursday's message is quieter in tone and larger in consequence. For two decades, China's most ambitious technology companies treated New York and Hong Kong as their natural debuts, drawn by faster reviews and more flexible rules. Li's pledge flips the default. Beijing wants its champions on the Shanghai and Shenzhen bourses first.

Speed is the lever. The average review period for initial public offerings on the two mainland exchanges has been shortened to about six months, with some high-quality companies winning approval in less than a month, according to Caixin. Medium- and long-term funds have made net purchases of A-shares exceeding 600 billion yuan so far this year, giving the market the depth that foreign issuers once doubted.

For Hong Kong, the arithmetic is uncomfortable. The city's exchanges have built a lucrative franchise on listing mainland tech names, and any redirection of that pipeline lands directly on the revenues of investment banks and brokerages that underwrite it - a roster that includes Japanese securities houses as well as Chinese and Western ones. Beijing's counterargument is that a stronger onshore market and a stronger Hong Kong are not mutually exclusive; its "One Country, Two Systems" framing casts Hong Kong as the offshore risk-management layer that the onshore market still lacks.

Japan's Mirror: A Weak Yen and a Strong Push

Viewed from Tokyo, Thursday's press conference reads as a study in divergence. Japan internationalised the yen decades before China began the same journey, yet the yen's share of global payments has been static at best, and its weight in the SDR basket, 7.59 per cent, now sits below the yuan's. The yen, meanwhile, has been the market's problem child: it traded near 159 per dollar in August, close to its weakest levels since the 1980s, and Japan's Ministry of Finance spent 11.73 trillion yen, roughly US$74 billion, intervening between late April and late May this year - the largest intervention on record during a weak-yen phase.

China's currency push touches Japan directly. The PBOC and the Bank of Japan renewed their bilateral swap line in October 2024 at 200 billion yuan, or 3.4 trillion yen, valid for three years - exactly the sort of arrangement Lu now says Beijing will expand. Yuan-yen direct trading has existed since June 1, 2012, with Tokyo one of the venues, and Japanese policymakers have long harboured ambitions for Tokyo as an offshore yuan centre. Those ambitions have been overtaken by Hong Kong, London and Singapore.

The lesson Tokyo drew from the yen's experience - that a currency can be fully convertible, widely held and still lose ground when the home economy's growth and financial depth stall - is now the test Beijing faces. Lu's answer is infrastructure first: build the rails, deepen the market, and let the currency follow. He also pre-empted the most common criticism, saying China has neither the need nor the intention to deliberately weaken the yuan to make its exports cheaper, and that rising yuan invoicing has reduced trade's sensitivity to exchange-rate swings.

What to Watch For

Three dates and one number matter from here. China's President Xi Jinping is expected in Washington later this month, a state visit that will test whether the trade truce holding through 2026 survives contact with harder issues. Beijing hosts the 13th Xiangshan Forum from next Tuesday, with a Pentagon delegation led by Cynthia Carras, the US principal deputy assistant secretary of defence for China, Taiwan and Mongolia - a higher level of American participation than last year and a signal worth reading against the yuan story, because financial opening and security competition are now running in parallel.

The IMF's next SDR review, due by the end of July 2027, will test whether the yuan's 12.28 per cent weight is a floor or a ceiling. And the number to watch is the gap between China's clearing rails and its actual payment share: industry estimates suggest a large majority of CIPS traffic still relies on Swift messaging for routing, which is why 210 trillion yuan of clearing has not translated into a bigger slice of global payments.

For Asia's exporters, treasurers and central banks, the practical question is not whether the yuan becomes a reserve currency on par with the dollar. It will not, this decade. It is whether invoicing, hedging and settlement in yuan become cheap and reliable enough that choosing them stops being a political statement and starts being a routine cost decision. On Thursday's evidence, Beijing intends to keep lowering that threshold - one swap line, one clearing bank and one listing at a time.

By Kenji Tanaka, Staff Writer

This article was produced with AI-assisted research and editorial support. Sources: South China Morning Post, Caixin Global, People's Bank of China, China Securities Regulatory Commission, Xinhua, Swift, International Monetary Fund, Bank of Japan, Japan Ministry of Finance.