In the context of China's rise, the renminbi is gradually emerging as the first choice for international payments.
An article in the American newspaper Wall Street noted that the global use of the Chinese currency is surging, which complicates the impact of possible Western sanctions on China in the future. From the numbers to the complex economic mechanisms behind them, the rise of China's currency not only plays a key role in the world, but also has a profound impact on the international political landscape.
First, let's focus on some striking numbers. According to the data, since mid-2020, cross-border RMB settlement of Chinese goods** has more than doubled on a monthly basis, and is now equivalent to about 1 4 of China's major commodities**, compared with only about 13% in 2019.
In addition, data from the Society for Worldwide Interbank Financial Telecommunication (SWIFT) indicates that there are 36% of international payments were made in yuan, up from less than 2% in January and slightly lower than 3% in September7% - the latter hit an all-time high. It is important to note that the actual figure may be higher, as some RMB transactions involving U.S.-sanctioned entities will not use SWIFT.
Much of this surge is due to the Russia-Ukraine conflict and Western sanctions imposed on Russia. Against this background, Russia replaced Saudi Arabia as China's largest oil country and quickly became the main market for Chinese cars. This has led to the fact that most of the bilateral ** between China and Russia is settled in RMB. It is worth noting that China's other ** partners, especially developing countries that are unlikely to side with the West in a hypothetical conflict, are also beginning to take notice.
However, while the rising status of the renminbi has provided some degree of protection for the Chinese economy, the sanctions that may be faced in the future will still cause significant damage to capital flows outside of **. Sanctions could hit China's ability to use its dollar reserves, especially if capital controls remain in place. This will limit the attractiveness of the renminbi as an investment vehicle and could negatively impact its position as a reserve asset in developed countries.
Despite these challenges, the renminbi's rise in status is significant, especially given the West's emphasis on "de-risking" in its relations with China. The direction of the world is changing, and Southeast Asia and other places are gradually becoming important hubs for the assembly of Chinese goods, and then the products are shipped to the United States. In the process, the proportion of renminbi-denominated Chinese components exported to these regions is likely to increase, and some intermediate countries may also choose to increase their renminbi reserves to reduce risk.
China is still a global exporter, and global politics is spreading to the payment system. This trend is likely to have far-reaching international political and economic implications for Asia and further afield in the coming years. China's rise has not only had an economic impact, but has also shaped a new situation in the international political arena. The rise in dependence on China's currency may make the West more cautious and thoughtful in its China policy.
Overall, the status of the renminbi is quietly rising, which is not only a natural result of China's economic rise, but also a product of the evolution of the global pattern. China's influence on the global stage is growing, and the renminbi's position as an international means of payment is also consolidating. However, as the global landscape continues to change, China still needs to face various challenges, especially in the context of possible sanctions and capital controls. How China responds to these challenges, as well as the future development of the renminbi, will be the focus of international attention.
Despite the increasing use of the renminbi in the international market, U.S. sanctions and capital controls remain a potential threat. Sanctions can have a devastating impact on China's financial flows and international**. Especially in the context of tensions with Western countries, financial sanctions on Chinese companies and individuals may become a means to hinder the internationalization of the renminbi to a certain extent.
Capital controls are also an issue that cannot be ignored. Although China is gradually opening up its capital account, there are still certain restrictions. This limits the attractiveness of the renminbi globally as an investment and reserve asset. To solve these problems and improve the internationalization level of the renminbi, China needs to further deepen financial reform and improve the transparency and stability of the financial market.
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