RMB share in global payments increases

The renminbi is gaining increasing importance globally, thanks to China's economic resilience and the Chinese currency's stable fundamentals in the foreign exchange market, experts said.

According to data provided by global financial messaging services provider Society for Worldwide Interbank Financial Telecommunication (SWIFT) on Thursday, the RMB became the fourth most active currency for global payments by value in November. The top three are the US dollar, the euro and the British pound.

The last time that the Chinese currency was in fourth place was in January 2022, before falling to fifth place a month later.

The RMB's share in global payments stood at 4.61 percent last month, up from 3.6 percent in October.

The value of payments made with the RMB increased by 34.87 percent over the previous month in November, while the increase was around 5.35 percent for the other major currencies.

Meanwhile, the RMB ranked as the second most frequently used global currency in the trade finance market in November, next to only the US dollar. The Chinese currency was in third place for this gauge in October.

Alicia Garcia-Herrero, Asia-Pacific chief economist for French bank Natixis, wrote in an article in the Financial Times on Dec 6 that the RMB has made "impressive" achievements in 2023 in terms of faster increase in its cross-border use. This can be proved by the increase in the currency's share in global payments from 1.91 percent in January to 3.6 percent in October as observed by SWIFT, she wrote.

Some RMB international payments are settled through China's Cross-border Interbank Payment System instead of SWIFT. This means that the share of RMB in global cross-border transactions might be underestimated, she said.

China's efforts to realize more trade settlements in RMB, geopolitical concerns, bilateral currency swaps between the People's Bank of China and more than 30 central banks, and the increasing number of RMB clearing centers offering more RMB liquidity offshore, have all contributed to the wider use of the Chinese currency in the international market. On top of that, China's economic power is another key factor elevating the RMB's international importance, she said.

Last month, the International Monetary Fund raised its estimate for China's 2023 GDP growth to 5.4 percent from 5 percent. Its forecast for China's GDP growth next year was raised to 4.6 percent from 4.2 percent.

According to data provided by the National Bureau of Statistics on Dec 15, the added value reported by industrial companies with respective minimum annual turnover of 20 million yuan ($2.8 million), rose 6.6 percent year-on-year in November.

The total import and export value of goods increased 1.2 percent last month, while the value of exports alone went up by 1.7 percent, ending a six-month decline.