Yuan rapidly gaining ground as Chinese firms plot global expansion

Chinese companies expanding overseas are progressively utilizing the yuan for financing and payments to physique their planetary operations, boosting the currency's increasing clout successful planetary commercialized and investment.

"Based connected my calculation, 10 per cent of our company's full orders were priced and settled successful renminbi," said Yang Feng, concern manager for overseas selling astatine Sieyuan Electric, successful a sheet treatment organised by Standard Chartered astatine the China International Import Expo successful Shanghai connected November 7. The details of the sheet treatment were posted connected the bank's authoritative WeChat relationship connected Friday.

He added that astir Chinese companies that person concern partnerships with Sieyuan "are often each other's suppliers oregon customers, giving some sides a beardown inducement to settee transactions successful yuan".

Do you person questions astir the biggest topics and trends from astir the world? Get the answers with SCMP Knowledge, our caller level of curated contented with explainers, FAQs, analyses and infographics brought to you by our award-winning team.

Shenzhen-listed Sieyuan Electric, which designs, manufactures and sells powerfulness transmission and organisation equipment, has operations successful galore countries, including the UK, Italy, Saudi Arabia and Kuwait.

Standard Chartered expects the Chinese authorities to beforehand greater usage of the yuan successful planetary transactions. Photo: Xinhua alt=Standard Chartered expects the Chinese authorities to beforehand greater usage of the yuan successful planetary transactions. Photo: Xinhua>

In the archetypal six months of the year, the usage of the yuan successful cross-border payments totalled 35 trillion yuan (US$4.9 trillion), up 14 per cent from a twelvemonth earlier, according to the People's Bank of China.

Yang said the willingness of the company's non-Chinese clients to settee successful yuan was highest among countries progressive successful the Belt and Road Initiative, specified arsenic Pakistan, Thailand and Malaysia, Saudi Arabia, Uzbekistan and Kazakhstan.

"Renminbi internationalisation is advancing quickly," helium said. "As much Chinese firms spell global, the usage of renminbi volition people rise. The renminbi offers notably competitory involvement rates close now, which is simply a large origin successful reducing our financing costs."

China held its one-year indebtedness premier rate, the benchmark for lending to companies, astatine 3 per cent and five-year rates astatine 3.5 per cent for the 5th consecutive period successful October, portion US dollar borrowing costs hover astir 4 per cent.

Universal Energy, a 10-year-old renewable vigor developer based successful Shanghai, is different institution capitalising connected favourable yuan financing costs. In July, the institution borrowed 256 cardinal yuan from Industrial and Commercial Bank of China and Bank of China to money a 100-megawatt upwind powerfulness task successful Kazakhstan.