At first glance, it looks like a missed opportunity.
While central banks worldwide have been reducing their exposure to the US dollar, partly in response to President Donald Trump’s trade policies and military interventionism, the Chinese renminbi doesn’t seem to have gained very much from the greenback’s growing unpopularity.
It accounts for just 2% of official foreign exchange reserves, almost the same level as a decade ago. Hardly the outcome Beijing would have been hoping for given its publicly-stated ambition to challenge the dollar’s reserve currency status.
But a deeper analysis suggests that Chinese authorities should not be feeling too aggrieved.
Across several dimensions, the renminbi is making steady progress towards internationalisation, and its advance is quietly reconfiguring global commerce, finance and investment.
International trade is one area where it is making its presence felt. Official figures show that the unit has risen into the top tier of globally-traded currencies. A report from the Bank for International Settlements finds that the share of foreign exchange trades denominated in the renminbi reached 8.5% by the end of last year, up from 7% five years earlier.
The Chinese currency has closed the gap on pound sterling, the fourth most traded currency, while also widening its lead over the Swiss franc, the Australian dollar and the Canadian dollar.
A settlement currency
The same patterns are evident in other parts of the international trading system.
The renminbi is the invoicing and settlement currency for an ever larger volume of China’s non-domestic transactions, particularly with commodity exporters, Russia and other emerging nations.
The share of trade settled in the unit has roughly doubled since 2019 to 34%.
That figure should increase further with the development of China’s own dedicated payments infrastructure, the Cross‑Border Interbank Payment System (CIPS).
Volumes routed through CIPS - conceived as an alternative to Western‑controlled messaging systems such as SWIFT - have already grown rapidly.
According to China’s state media agency, the value of transactions settled in renminbi via CIPS reached RMB 920 billion per day in April, or USD 135 billion, up from an average of RMB 680 billion per day for 2025.
As more banks join CIPS, network effects will make it even easier for third‑country trade linked to China to be settled in the currency.
Policy pragmatism
Another decisive development in the renminbi’s advance is policy agility from Beijing. Specifically, the government has devised a mechanism that can increase the currency’s international usage without abandoning its cherished capital controls.
The split between the onshore and offshore versions of the Chinese unit has been central to this strategy.
On the one hand, the establishment of an offshore renminbi market, based in Hong Kong, allows foreign investors and firms to transact in the Chinese currency more easily. On the other, international access to China’s mainland investments is tightly controlled through regulated platforms such as Stock Connect and Bond Connect.
Investment cred
Beyond trade, the renminbi is also gaining traction as an investment currency, thanks to China’s low interest rates. Currently, renminbi-denominated bonds account for just 1% of internationally-traded debt according to the European Central Bank.
But with official rates having been cut to 1.4% - well below those in most parts of the developed world – the bond market has in the past year become a magnet for overseas borrowers. Portugal and Indonesia are among the sovereign issuers to have sold renminbi-denominated bonds in recent months while foreign corporations have also tapped the market in greater numbers.
The volume of Panda bonds – debt issued by foreign entities but sold on the mainland – rose by almost 16% in 2025 and by 97% on a yearly basis in the first quarter of 2026.
Reserve status not in sight but influence will surely grow
For all this, there are significant obstacles to the renminbi’s evolution into a fully-fledged alternative to the dollar.
Its transformation into an international transaction currency may have been swift and relatively smoothbut its progress on other fronts will be more drawn out.
China’s capital controls and its unpredictable legal and regulatory regime limit the extent to which private and official investors can or wish to hold the currency as a store of value.
What’s more, the dollar is underpinned by a uniquely large and liquid capital market, which ensures its dominant role in global trade invoicing and cross‑border financing.
Still, it is undeniable that the renminbi has carved out a more influential role in international finance. It is already the pillar of a parallel trading and settlement system and is increasingly being used by central banks and institutional investors as a defensive hedge during periods of geopolitical upheaval.
At minimum, these developments should loosen the US’s grip on global commerce and trade finance. The same trends might also undermine the international standing of developed world currencies such as the Japanese yen and the British pound and could present a serious challenge to the euro in the financing of global trade.
The renminbi may never unseat or even challenge the dollar as a reserve currency. But that won’t necessarily be seen as a failure in Beijing. A world in which the Chinese currency secures an expanding share of trade settlement, commodity invoicing and emerging-market finance would already represent a profound overhaul of the architecture of the international monetary system.
