The Quiet Rise of the Renminbi

What China’s expanding currency network means for cross-border business and investment

A more layered monetary system

Discussion of the renminbi is often framed as a contest for global monetary supremacy. That framing is too simple. The US dollar remains the principal reserve, funding and settlement currency of the international financial system. The more significant development is that the renminbi is becoming usable in a growing number of specific functions: settlement of trade with China, offshore financing, foreign-exchange dealing, cross-border payments and selected investment channels.

The latest official data illustrate both sides of the argument. In the fourth quarter of 2025, the US dollar represented 56.77% of allocated official foreign-exchange reserves, while the renminbi accounted for 1.95%. In the foreign-exchange market, the dollar appeared on one side of 89.2% of transactions in April 2025, compared with 8.5% for the renminbi. The gap remains substantial, but the renminbi is no longer a peripheral trading currency: it was the fifth most actively traded currency in the 2025 BIS survey.

The emerging system is therefore better described as layered rather than binary. Dollar centrality continues, while the renminbi gains relevance in transactions connected with Chinese trade, banking and investment. This selective internationalisation can alter commercial behaviour without producing a wholesale transfer of monetary leadership.

The position in figures

‍The infrastructure behind international use

CIPS and cross-border settlement

A currency becomes international only when firms and financial institutions can obtain it, move it, invest it and manage the resulting risks. China has spent more than a decade building that infrastructure. The Cross-Border Interbank Payment System (CIPS) is the most visible component. As at 24 June 2026, CIPS reported 194 direct participants and 1,597 indirect participants, with an annual business volume of RMB180 trillion in 2025. CIPS does not replicate every function of SWIFT, but it provides a specialised clearing and settlement network for cross-border renminbi transactions and reduces operational dependence on correspondent chains designed principally around other currencies.

Hong Kong’s offshore renminbi market

Hong Kong remains central to this architecture. The Hong Kong Monetary Authority reported that average daily renminbi foreign-exchange turnover in Hong Kong rose by 64.8% between the 2022 and 2025 BIS surveys, reaching US$315.1 billion in April 2025. The city combines offshore renminbi liquidity with common-law commercial infrastructure, internationally connected banks and access channels linking offshore investors with mainland markets.

Liquidity backstops and institutional recognition

Liquidity support has also become more substantial. The HKMA’s RMB Business Facility, introduced in October 2025 and expanded to RMB200 billion in early 2026, provides banks with a stable source of renminbi funding for financing corporate activity. At the central-bank level, the European Central Bank and the People’s Bank of China extended their bilateral swap arrangement in September 2025 to October 2028, maintaining a maximum size of CNY350 billion and EUR45 billion. Such arrangements are backstops rather than substitutes for commercial markets, but they reduce the risk that local renminbi shortages disrupt otherwise viable transactions.

The renminbi’s inclusion in the International Monetary Fund’s Special Drawing Rights basket provides further institutional recognition. Its present basket weight is 12.28%, although that weight should not be confused with its much smaller share of official foreign-exchange reserves. The two measures answer different questions: the SDR basket reflects the IMF’s valuation methodology, whereas reserve shares reflect actual allocation decisions by central banks and other official institutions.

Where the renminbi is gaining ground

The strongest evidence of internationalisation is found in commercial use rather than reserve accumulation. According to China’s official reporting, cross-border renminbi payments and receipts for trade in goods represented 26.5% of China’s total local- and foreign-currency settlement during the first eight months of 2024, while the corresponding share for trade in services reached 31.8%. By the end of 2024, the currency ranked fourth in global payments and third in global trade finance.

These figures do not mean that the renminbi is used uniformly across world trade. Its adoption is strongest where one party has Chinese revenues, procurement obligations, financing needs or treasury balances. A Chinese exporter may prefer renminbi invoicing to avoid converting foreign-currency receipts. An overseas purchaser may accept renminbi pricing in exchange for improved commercial terms. A group with substantial China-related cash flows may borrow or hedge in renminbi to create a natural offset. The commercial case is therefore transaction-specific.

Shanghai’s 2024 cross-border renminbi settlement volume of RMB29.8 trillion, representing 47% of China’s national total, also shows that the currency’s expansion extends beyond goods invoicing. A large proportion of that activity related to investment, financing and securities transactions. The renminbi is developing not only as a trade currency, but as a currency in which claims can be issued, funded and managed.

Why dollar dominance remains intact

The renminbi’s progress should not obscure the structural advantages supporting the dollar. US capital markets are exceptionally deep and liquid; US Treasury securities provide a large pool of widely accepted safe assets; and the dollar benefits from network effects built over decades. International contracts, commodity prices, bank funding, derivatives and reserves are mutually reinforcing. A firm that invoices in dollars can usually hedge, borrow, invest and settle in the same currency across a wide range of jurisdictions.

China has not created an equivalent degree of openness. The onshore renminbi remains subject to capital-account controls, administrative rules and a managed exchange-rate framework. Market participants must also distinguish between onshore renminbi (CNY) and offshore renminbi (CNH), whose liquidity and pricing can differ. Access to mainland securities and the repatriation of proceeds may depend on the relevant investment channel, regulatory status and documentary compliance.

These restrictions are not accidental. Chinese policy continues to balance wider international use of the currency against domestic financial stability and control of capital flows. That approach supports gradual expansion, but it also limits the renminbi’s attractiveness as a universal reserve and funding currency. The most plausible medium-term outcome is therefore continued dollar dominance alongside greater functional use of the renminbi in selected markets and corridors.

Practical implications for businesses and investors

For legal, tax and finance teams, the rise of the renminbi is not an abstract geopolitical issue. It creates practical choices that should be assessed transaction by transaction.

Contract currency and pricing

A renminbi-denominated contract should state clearly whether payment is to be made in CNY or CNH, identify the permitted payment account and address what happens if exchange controls, banking restrictions or market disruption prevent settlement in the agreed currency.

Foreign-exchange risk

Renminbi invoicing removes one party’s dollar exposure but may transfer risk to the counterparty. Pricing, adjustment, hedging and termination clauses should reflect the availability and cost of hedging in the relevant market and tenor.

Banking and payment routes

Access to CIPS or offshore liquidity does not guarantee that every bank will process a transaction. Banks continue to apply their own customer-risk appetite, sanctions screening, source-of-funds review and documentary requirements. Payment routing should be checked before contractual obligations become unconditional.

Tax and accounting

The currency of payment does not determine the underlying tax treatment. Withholding tax, transfer pricing, permanent-establishment exposure and indirect taxes remain governed by the applicable law and transaction character. Accounting teams must also determine the functional currency and recognise foreign-exchange differences under the relevant reporting framework.

Investment and financing

Renminbi debt, deposits and securities may provide useful diversification or natural hedging, but investors should assess convertibility, liquidity, custody, repatriation and regulatory-access risks. A higher international profile does not remove the need to understand the legal rights attached to the instrument and the market in which it is held.

Sanctions and regulatory compliance

Use of the renminbi is not a lawful means of avoiding sanctions, export controls or anti-money-laundering obligations. Transactions involving higher-risk jurisdictions or counterparties may face enhanced scrutiny even where no US-dollar clearing is involved.

For internationally mobile entrepreneurs and investment families, these issues should be coordinated with the location of treasury functions, the tax residence of operating and holding companies, banking relationships and the documentary evidence supporting source of wealth and source of funds. A payment architecture that appears efficient at group level may create regulatory or tax complications if individual entities lack substance, authority or a clear commercial rationale.

A currency can matter without becoming dominant

The renminbi is not on the verge of replacing the US dollar. Official reserves remain heavily concentrated in dollars, and the depth, liquidity and openness of US financial markets continue to set the global standard. The important change is narrower but commercially significant: the renminbi has acquired payment infrastructure, offshore liquidity and institutional support sufficient to make it a credible working currency for an expanding range of China-related transactions.

Its international role is therefore likely to advance through use rather than declaration. Each additional trade contract, financing arrangement, clearing relationship and offshore liquidity facility strengthens the network around the currency. The result is not a new single-currency order, but a more complex monetary environment in which businesses may operate across several settlement and funding systems.

For professional advisers, the correct response is neither to dismiss the renminbi as marginal nor to treat “de-dollarisation” as an inevitable strategy. The relevant question is whether renminbi use improves the economics and resilience of a particular transaction while remaining compatible with banking, tax, accounting and regulatory requirements. Where that analysis is undertaken carefully, the currency’s quiet rise can represent a practical commercial option rather than a geopolitical slogan.

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Frequently asked questions

Is the renminbi replacing the US dollar?

No. The US dollar remains dominant in official reserves, global funding and foreign-exchange trading. The renminbi is becoming more important in narrower functions, especially China-related trade settlement, offshore financing, cross-border payments and selected investment channels. Its commercial relevance can therefore increase without displacing the dollar as the principal global currency.

What is the difference between CNY and CNH?

CNY generally refers to onshore renminbi traded and settled within Mainland China under the domestic regulatory framework. CNH refers to offshore renminbi, principally traded outside Mainland China, including through Hong Kong. Their exchange rates and liquidity can differ, so contracts should specify which market and payment account apply.

What is CIPS and how is it different from SWIFT?

CIPS is a specialised clearing and settlement infrastructure for cross-border renminbi transactions. SWIFT is a global financial messaging network used across many currencies and transaction types. CIPS can use SWIFT messaging in some contexts and should not be described as a complete one-for-one replacement for the wider SWIFT and correspondent-banking ecosystem.

Why is Hong Kong important to the offshore renminbi market?

Hong Kong is the largest offshore renminbi foreign-exchange centre and combines international banks, offshore RMB liquidity, common-law commercial infrastructure and access channels to Mainland markets. This makes it an important location for RMB trading, financing, settlement and investment products.

Should an international company invoice customers in renminbi?

It depends on the company’s revenues, costs, counterparties and treasury profile. RMB invoicing may reduce conversion costs or create a natural hedge where there are China-related cash flows, but the company should test liquidity, bank access, hedging cost, payment documentation, tax, accounting and contract-enforcement issues first.

What should an RMB-denominated contract specify?

The contract should specify whether settlement is in CNY or CNH, the permitted payment account, the exchange-rate or adjustment mechanism where relevant, documentary requirements, payment-routing responsibilities and the consequences of exchange controls, banking restrictions or market disruption.

Does receiving payment in renminbi change the tax treatment?

Not by itself. Tax treatment generally depends on the legal character of the transaction, source rules, withholding taxes, transfer pricing, permanent-establishment exposure and applicable domestic law or treaties. Accounting teams must separately assess functional currency and foreign-exchange differences.

Can renminbi settlement bypass sanctions or AML controls?

No. The settlement currency does not remove sanctions, export-control, anti-money-laundering or bank due-diligence obligations. A transaction can face enhanced scrutiny even when it does not involve US-dollar clearing, particularly where the counterparties, ownership, goods, payment route or jurisdictions present elevated risk.

What should investors assess before buying RMB assets?

Investors should assess convertibility, market liquidity, custody, settlement, repatriation, access-channel restrictions, credit risk, legal rights, taxation and the distinction between onshore and offshore markets. A higher international profile does not eliminate instrument-specific or jurisdiction-specific risk.