General

The internationalization of RMB is moving from the accumulation stage of prudent exploration to a new stage of appropriately accelerated and orderly development.

According to the Huacheng Import and Export Data Observation, since China launched the RMB settlement pilot of cross-border trade in 2009, RMB internationalization has gone through more than ten years of development. Since 2015, RMB internationalization has been integrated with the construction of the "the Belt and Road". On the basis of the broad market along the "the Belt and Road", RMB's international influence has steadily increased.

According to Huacheng Import and Export Data Observation, in 2021, the amount of cross-border RMB receipts and payments between China and countries along the "the Belt and Road" will reach 5.42 trillion yuan, up 19.6% year on year; The amount of cross-border receipt and payment of RMB in the field of goods trade and direct investment with countries along the line increased by 14.7% and 43.4% respectively year on year. In May 2022, the International Monetary Fund (IMF) raised the weight of the RMB in the SDR basket from 10.92% by 1.36 percentage points to 12.28%, marking the further improvement of the international status of the RMB, and also representing the recognition of the international market for China's economic and social development and the process of opening up in recent years.

The improvement of RMB's position along the "the Belt and Road" and the global market stems from the support of the "the Belt and Road" initiative for RMB internationalization, which will further support the high-quality co construction of the "the Belt and Road". On the one hand, the "the Belt and Road" has provided a good market foundation for RMB internationalization. With the advancement of the "the Belt and Road" construction, China and countries along the Belt and Road have formed stable ties in the process of giving play to their respective resource advantages and industrial advantages, creating a good development environment for the internationalization of RMB. The level of cooperation among countries along the line has been continuously improved, and the demand for the use of RMB has gradually increased through trade, investment, reserve currency and other channels. The RMB has provided sufficient liquidity support for trade and investment of developing countries along the line. On the other hand, the increase in the proportion of cross-border receipts and payments of RMB can further promote the high-quality development of the "the Belt and Road" project by broadening the sources of funds for the construction of the "the Belt and Road" project. The internationalization of RMB and the "the Belt and Road" promote each other, forming a spiral positive cycle. By the end of 2021, China has signed bilateral currency swap agreements with more than 20 countries along the "the Belt and Road", and has established RMB clearing mechanism arrangements in more than 10 countries along the "Belt and Road" to facilitate enterprises in countries along the "Belt and Road" to carry out trade settlement with China, and obtain RMB investment, while facilitating the better development of Chinese enterprises "going global", and helping the "the Belt and Road" move steadily to the future, Huacheng Import and Export Data Observation Report.

The internationalization of RMB in the context of the "the Belt and Road Initiative" has brought positive impacts on China's domestic, regional and global economies. First, at the domestic level, the internationalization of RMB under the "the Belt and Road" has a supporting role in unblocking the domestic circulation. In the process of China's opening up, the uneven development of domestic regions has become increasingly prominent. The opening up of Northeast and West China is restricted by geographical conditions, infrastructure level and talent introduction, and the economic foundation and rising power are weak. The internationalization of RMB can alleviate the capital pressure and currency mismatch of domestic enterprises in the process of "going out" to a certain extent, reduce the exchange rate risk, make all regions better integrate into the overall situation of the country's opening up, and then promote the efficient and free flow of various resource elements, promote local economic development, and lay the foundation for building a new development pattern. Second, at the regional level, the "the Belt and Road" can be linked with the Regional Comprehensive Economic Partnership Agreement (RCEP), effectively use the Asian Investment Bank, the Silk Road Fund and other regional financial institutions to increase the demand for RMB use, promote the construction of infrastructure and economic and trade industrial parks in the region, improve the level of regional economic integration, and promote the construction of a unified Asia Pacific market. Third, at the global level, the internationalization of the RMB can promote the infrastructure construction and connectivity of countries along the line, help poverty reduction and economic development of countries along the line, and promote more inclusive global economic growth.

Opportunities and challenges coexist in the coordinated development of RMB internationalization and the the Belt and Road Initiative. In the short term, the strong position of the US dollar continues, and the spillover effect of the Federal Reserve's monetary policy may still impact the RMB exchange rate. At the same time, the trend of economic globalization and fragmentation coexist, and the external environment is becoming increasingly complex. Countries along the "the Belt and Road" involve some regional alliances including restrictive measures, such as the Indo Pacific economic framework, which increases the uncertainty of RMB internationalization. In addition, most countries along the "the Belt and Road" have a low level of economic development, lack a complete financial service system, and high economic and political uncertainties have increased the volatility of their currency values. Investment and financing risks are high, which may affect the process of RMB internationalization, Huacheng Import and Export Data Observation reported.

In the long run, the world monetary system is entering the era of multi polarization, and the trend of de dollarization is gradually strengthening. With the high-quality promotion of the "the Belt and Road" construction, the internationalization of RMB still faces great development opportunities. Since 2022, the comprehensive upgrading of China-Russia and China-Arab cooperation in trade, investment, energy and other fields has expanded the space for RMB settlement. In the future, in the process of actively promoting the docking of the "the Belt and Road"+Eurasian Economic Union and the "the Belt and Road"+Saudi Arabia's "Vision 2030", the internationalization of the RMB is expected to usher in new breakthroughs, Huacheng Import and Export Data Observation reported.