Full Breakdown
China’s Push for Yuan Internationalization Through Import Settlements
1/21/2026, 12:58:41 PM
Proposal for Yuan Utilization in Trade
Former People's Bank of China adviser Liu Shijin has advocated for China to leverage its substantial buying power to enhance the use of the yuan in international trade. Speaking at a forum at Peking University, Liu emphasized the need for China to shift towards a more balanced trade structure by increasing the proportion of imports settled in yuan. This proposal aims to accelerate the yuan's internationalization, a process that began in 2009 when Beijing allowed select exporters to receive payments in the Chinese currency.
Current State of the Yuan
Despite being the world's largest goods exporter, China's yuan remains significantly behind other currencies in terms of international standing. Liu pointed out that the yuan's global influence does not reflect China's economic stature. He urged that during the upcoming 15th five-year planning period (2026-2030), efforts should be made to narrow this gap. Liu noted that a strong currency is characterized by a high share of imports settled in the home currency, suggesting that China’s large population could support a more extensive consumer market.
Context of the Proposal
Liu's remarks come at a time when the yuan has been appreciating steadily, coinciding with growing concerns regarding the US dollar's stability amid policy uncertainties under President Donald Trump. These concerns have been heightened by recent geopolitical developments, including U.S. actions related to Greenland and pressures on its allies. Liu's call for increased yuan settlements in trade is seen as a strategic move to bolster the currency's position in the global market.
Criticism & Opposition
While Liu's proposal has garnered attention, critics may argue that increasing the yuan's use in trade could face resistance from international partners accustomed to transacting in more established currencies like the US dollar. Additionally, there are concerns about the potential implications for China's export competitiveness if the yuan is not managed carefully.
Official Statements & Responses
Liu Shijin stated, “China is the world’s largest goods exporter, but the yuan’s international standing still lags far behind,” highlighting the urgency of the situation. He further noted, “With China’s population roughly four times that of the United States, it should be fully possible for China to build a consumer market far larger.”
What's Next
As China prepares for its 15th five-year planning period, the focus on enhancing the yuan's international role will likely continue. Observers will be monitoring how the Chinese government implements policies to increase the share of imports settled in yuan and the potential impact on global trade dynamics.
