Chinese foreign policy

Policy brief

published: 31.10.2023

Third time lucky? China’s push to internationalise the renminbi

Alessia A. Amighini

Alicia Garcia Herrero

In this policy brief, the authors dives into China’s efforts to internationalise the renminbi. They find that China’s economic authorities have made several efforts to internationalize the RMB since the 2008 global financial crisis with rather underwhelming progress until recently. Since 2022, coinciding with Russia’s invasion of Ukraine and the further weaponization of the US dollar, RMB cross-border settlements have increased for trade and financing, especially with emerging countries. This is even more impressive if one considers that the RMB has been depreciating since January 2023 and economic performance has been underwhelming.

Whether China will succeed in this renewed attempt to internationalize the RMB by using its heavy weight among trading nations is hard to tell. Still, it is so far going quite well compared to previous attempts to internationalize the currency. Constraints for a full internationalization of the currency remain, but China’s somewhat heterodox approach to internationalizing the currency could still be successful given the ongoing weaponization of the dollar.

About authors

Alessia A. Amighini

Co-Head of Asia Centre, Senior Associate Research Fellow at ISPI, Associate Professor at the University of Piemonte Orientale

Economist, specializing on China’s international economic relations

Alicia Garcia Herrero

Chief Economist for Asia Pacific at Natixis, Senior Fellow at Bruegel, Non-resident Senior Follow at the East Asian Institute, Adjunct Professor at the Hong Kong University of Science and Technology

Economist specialized in monetary and financial issues in emerging markets, banking crises and resolution strategies, financial development