China’s central bank announced on Monday that it is encouraging state-owned enterprises to prioritize the use of the yuan in overseas payment and settlement, a move aimed at accelerating the yuan’s internationalization amid rising global trade tensions.
This statement comes as U.S. President Donald Trump has implemented “reciprocal” tariffs, disrupting global trade and financial markets. Although Trump temporarily paused tariff hikes for most countries, he increased duties on Chinese goods to 145%, prompting retaliatory measures from Beijing.
The People’s Bank of China (PBOC) has urged commercial banks in Shanghai to enhance cross-border credit expansion, which would lower yuan financing costs and promote yuan-denominated imports and exports. The PBOC also announced plans to strengthen the Cross-Border Interbank Payment System (CIPS), explore the use of blockchain technology, and improve settlement and clearing services for global trade, shipping, investment, and financing in yuan.
Additionally, the PBOC intends to support the Shanghai Gold Exchange in collaborating with overseas exchanges to expand the use of yuan-based benchmark prices in global markets. This initiative is a joint effort with the National Financial Regulatory Administration, State Administration of Foreign Exchange, and the Shanghai municipal government.
