Beijing Escalates Yuan-Internationalisation Drive as Dollar Weakens

China has begun a broad campaign to raise the yuan’s global profile, capitalising on weakening confidence in the U.S. dollar. The offshore yuan strengthened to its highest level since November after officials signalled that the moment is ripe to accelerate “de-dollarisation.” People’s Bank of China Governor Pan Gongsheng last week outlined plans for a digital-yuan internationalisation centre in Shanghai and the launch of yuan foreign-exchange futures. Three major mainland exchanges have since opened 16 additional commodity futures and options contracts—including rubber, lead and tin—to qualified foreign institutional investors, a step aimed at embedding the currency in global pricing benchmarks. Beijing is also seeking to ease market access: foreign currencies may be accepted as collateral in yuan-settled trades, fee waivers have been offered for overseas institutions entering the bond market, and ETF options trading will open to foreign investors in October. Morgan Stanley’s China unit has secured approval to widen its local brokerage to futures and options, underscoring growing foreign participation. Despite the push, structural hurdles remain. The yuan accounted for just 2.89% of global payments in May, far behind the dollar’s 48.46%, according to SWIFT. Analysts say tight capital controls and legal opacity continue to limit large-scale inflows, but note that institutional investment in yuan assets is rising as Asia gradually diversifies away from the greenback.