Milestone: Yuan Overtakes Dollar as China’s Most Used Cross-Border Currency for the first time in March 2023

[jhungary]

US may not be a good example here due to the inevitable decoupling, but I suppose what remains of China-US bilateral trade could still go through SWIFT in the future

You still don't get it.

Trade are done independently in this case, not dictated by any currency, it was denominated by Yuan only, but the other party still pay with whatever currency they are using. Say an Aussie go to China and order a coffee at the airport, the price is 20 Yuan, and that Aussie pay with a commonwealth bank credit card. That's a cross border transaction even if the entire transaction take place in China.

Problem is, even this sale denominated in Yuan, that does not mean that Australian Customer pays in Yuan, he pays with Australian Dollars he had in his account with his commonwealth bank credit card, and then it change hands a few times (usually AUD -> USD and then USD -> CYN but can be depending on the bank) and it get to the coffee vendor account in Yuan. But then if you compare that to a person who spend 20 yuan for the same cup of coffee using a Bank of China Credit Card paying both in Yuan, that coffee vendor would earn less on that Australian customer using an Australian Bank card than a Chinese customer paying either in cash or in a Chinese Credit Card.

As I said, this have nothing to do with currency share or reserve status, this is simply bad for the Chinese vendor here. If fact, in my case, you actually helped the USD because you now involved the USD even if both the customer and the seller weren't American. You are basically increasing the exposure of USD in this case.

 

[大汉奸柳传志]

You still don't get it.

Trade are done independently in this case, not dictated by any currency, it was denominated by Yuan only, but the other party still pay with whatever currency they are using. Say an Aussie go to China and order a coffee at the airport, the price is 20 Yuan, and that Aussie pay with a commonwealth bank credit card. That's a cross border transaction even if the entire transaction take place in China.

Problem is, even this sale denominated in Yuan, that does not mean that Australian Customer pays in Yuan, he pays with Australian Dollars he had in his account with his commonwealth bank credit card, and then it change hands a few times (usually AUD -> USD and then USD -> CYN but can be depending on the bank) and it get to the coffee vendor account in Yuan. But then if you compare that to a person who spend 20 yuan for the same cup of coffee using a Bank of China Credit Card paying both in Yuan, that coffee vendor would earn less on that Australian customer using an Australian Bank card than a Chinese customer paying either in cash or in a Chinese Credit Card.

As I said, this have nothing to do with currency share or reserve status, this is simply bad for the Chinese vendor here. If fact, in my case, you actually helped the USD because you now involved the USD even if both the customer and the seller weren't American. You are basically increasing the exposure of USD in this case.

I think what the report means are bulk B2B trade orders making a switch from SWIFT to CIPS or mBridge, nothing about cross border B2C trade,no one is saying Temu or Shein are suddenly asking customers in the west to pay RMB

 

[jhungary]

I think what the report means are bulk B2B trade orders making a switch from SWIFT to CIPS or mBridge, nothing about cross border B2C trade,no one is saying Temu or Shein are suddenly asking customers in the west to pay RMB

No, it said "Cross Bordering Transaction"

You don't do cross border transaction with SWITF or CIPS. Because if this is the payment settlement you go thru, you either have to pay the complete transaction BEFORE or AFTER the transaction, because that would have been a single lumsum payment. Or in the airport coffee house case, you don't ask your customer to TT you the 20 Yuan when he is in front of you....

Which mean unless you are telling me you are willing to wait for the whole payment to be pay AFTER you deliver, or the entire settlement is done by the customer before you even start the manufacturing process, this is not what it meant. And if you can't catch that, the tiny little tidbit from that article already said the SWIFT and direct transfer with USD remain unchanged.

The ratio is calculated based on the volume on all types of transactions, which includes securities trading through the links between mainland China and Hong Kong’s capital markets. It doesn’t represent transactions used by the rest of the world — the yuan’s share in global payments was little changed at 2.3% in March, according to Swift.

This is really about people buying from Temu and Shien on their website using customer own credit card. Well, that and they think Hong Kong and China security trade is "Cross Border"

 

[dbc]

I think what the report means are bulk B2B trade orders making a switch from SWIFT to CIPS or mBridge, nothing about cross border B2C trade,no one is saying Temu or Shein are suddenly asking customers in the west to pay RMB

it's not B2B, it's from the trade in bonds and stocks with Hong Kong.

 

[大汉奸柳传志]

Well, that and they think Hong Kong and China security trade is "Cross Border"

it's not B2B, it's from the trade in bonds and stocks with Hong Kong.

That's because HK is the designated offshore RMB clearing center, tracking this data is the easiest and most accurate way to calculate China's international trade in Yuan.

it has nothing to do with HK's stock market the way you may think.

 

[S10]

RMB doesn't need to replace the dollar.

Trading done in any other currency other than USD is a step forward in undermining the US financial empire.

 

[dbc]

That's because HK is the designated offshore RMB clearing center, tracking this data is the easiest and most accurate way to calculate China's international trade in Yuan.

it has nothing to do with HK's stock market the way you may think.

it's not what I think, it's written clearly in black and white in the Bloomberg news report posted by OP.

 

[beijingwalker]

China passed another milestone in its bid to reduce reliance on the dollar, as yuan usage in its cross-border transactions jumped ahead of the greenback’s for the first time in March.

Bloomberg used the word "milestone", haters can go after Bloomberg, haters take it out on the wrong person

 

[the_messenger]

At this?



Premature celebration?

The number from Swift is incomplete since Yuan clearance is made through CIPS, not SWIFT

 

[jhungary]

That's because HK is the designated offshore RMB clearing center, tracking this data is the easiest and most accurate way to calculate China's international trade in Yuan.

it has nothing to do with HK's stock market the way you may think.

Well, it doesn't really matter what I think, if you think "HK-China securities trade" are so called "Cross Bordered" then there are something wrong with your definition.

On the other hand, as I said, this does not affect currency standing what so ever. And that is the main point.

 

[VCheng]

The number from Swift is incomplete since Yuan clearance is made through CIPS, not SWIFT

Okay then what are the CIPS numbers? And what percentage of the total world transactions go through CIPS compared to SWIFT?

 

[jhungary]

The number from Swift is incomplete since Yuan clearance is made through CIPS, not SWIFT

It only matters if and when CIPS have similar rate of clearing as SWIFT, not when SWIFT Clear $5 trillion a day, CIPS clear 12 Trillion a year or $19.4 billions a day....

 

[the_messenger]

Okay then what are the CIPS numbers? And what percentage of the total world transactions go through CIPS compared to SWIFT?

I don't know. And that change nothing to the fact that the number you quote is incompleted.
Based on the report by Bloomberg itself, more than half value of China trade is in Yuan. Is there any number from anyone that disprove that report ? So that there is nothing fancy ? So that the yuan in China trade so tiny and insignificant?

 

[VCheng]

I don't know. And that change nothing to the fact that the number you quote is incompleted.

I merely mentioned what was given in the OP, that shows just how insignificant the percentage of global transactions are conducted in Yuan. CIPS will not affect that conclusion either.

 

[beijingwalker]

“The rise in yuan usage could be a natural consequence of China opening up its capital account, with rising inflows for China bonds and outflows for Hong Kong stocks,” Stephen Chiu, chief Asia foreign-exchange and rates strategist at BI, wrote in a note.

The rising share allows local firms to reduce the risks of currency mismatch in transactions, a spokeswoman at the State Administration of Foreign Exchange said at a Friday (April 21) briefing. China will further expand yuan settlement in cross-border transactions, the State Council said in a guideline aimed at boosting foreign trade issued Tuesday.

“Yuan internationalisation is speeding up as other countries seek an alternative payment currency to diversify risks and as the credibility of the Federal Reserve is not as good as before,” said Chris Leung, an economist at DBS Bank.