China’s yuan has gained global acceptance and usage in cross-border payments, reflecting the country’s growing economic influence. In the first half of 2024, the yuan made up 52% of China’s cross-border payments, compared to 43% for the US dollar. China’s focus on building a strong currency aligns with President Xi Jinping’s goal to elevate the yuan’s role in international finance.
A strong currency means everyone would like to hold it
Yuan’s increasing usage in global trade and financing, along with the rise of panda and dim sum bonds, demonstrate China’s efforts towards internationalization. However, challenges like geopolitical risks and market constraints hinder its full potential. Analysts believe attracting foreign investment in yuan-denominated assets will be crucial for its further growth.
Despite these challenges, China’s push for the yuan as a global currency remains a strategic goal in the country’s journey towards financial superpower status.
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