China’s growing shift away from the dollar
Efforts to reduce reliance on the US dollar for international trade have become increasingly prevalent over the past few years, particularly in key BRICS countries in the wake of Western embargoes of Russia in response to its invasion of Ukraine. And for China, this has begun to translate into results.
Monthly data published by China’s State Administration of Foreign Exchange on outbound and inbound non-bank cross-border payments shows that use of the yuan has climbed significantly over the past few years, and now accounts for the majority of transactions in both directions.
Payments from China have seen the yuan outpace the dollar consistently since May 2023, with January 2025 seeing $3.5bn in yuan-based payments sent from China, 55% of the total, versus $2.5bn in USD – a 40% share. However, payments into China now also have a yuan majority – despite taking longer to build share. The yuan led from January to August 2024 and the currency has consistently led again since November 2024. In January 2025, payments into China totalled $3.1bn in yuan (50%) and $2.8bn in USD (46%).
For 2024 as a whole, the yuan also held a larger share than the USD in both directions for the first time.
This represents a dramatic climb in share for the yuan over the past few decades. In January 2015 the yuan accounted for 22% of outbound payments, versus the USD’s 66%, and 28% of inbound payments, versus the USD’s 66%. Meanwhile, at the start of 2010 the yuan had less than half a percent for both outbound and inbound payments.
However, while the yuan has significantly increased its presence in cross-border payments to and from China, its use in global foreign exchange reserves remains low. In Q3 2024, the most recent period data is available for, the IMF reports that $257bn of global allocated foreign exchange reserves were held in yuan – a 2.2% share of the $11.8tn allocated reserves total. This is an increase on the 2% share held in Q3 2019, however it is lower than some points over the past few years, with the yuan’s share of global reserves peaking at 2.8% in Q1 2022.
Nevertheless, there are ongoing efforts to increase the use of the yuan in global money movement. For example, this week saw Hong Kong Exchanges and Clearing announce plans for an Asian international settlement house designed to rival Belgium’s Euroclear. According to the Hong Kong Monetary Authority, this would increase the yuan’s use as a global reserve currency, supporting moves to “internationalise” the yuan.
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