By Sheng Songcheng

As global supply chains are reshaped and Chinese companies expand overseas at pace, demand for cross‑border renminbi (RMB) financing is rapidly rising. Trade and investment are now working together as a “dual engine,” turning the RMB into an increasingly important tool for supporting real economic activity beyond China’s borders.

In this article, Professor Sheng Songcheng, Senior Advisor to CEIBS Lujiazui Institute of International Finance, shares data‑driven insights on the core financing advantages of the RMB in a low-interest-rate environment and complex international situation.

Chinese companies going global are driving international RMB demand

What is driving increasing global demand for the RMB? The structure of cross-border RMB settlement typically consists of two main categories: current account transactions and direct investment. Today, nearly 68% of cross‑border RMB settlements come from current‑account transactions such as trade, amounting to RMB 17.86 trillion. Goods trade alone accounts for over half of the total, while services and other categories continue to steadily grow.

On the investment side, both China’s inbound foreign direct investment (FDI) and outbound direct investment (ODI) are expanding. Currently, FDI accounts for 20.3% of total cross-border RMB settlements, while the share of ODI has risen to 11.8%. The continued growth of China’s ODI reflects the increasingly presence of Chinese businesses across global industrial and supply chains, and also highlights how Chinese companies are enhancing their international competitiveness and optimising the allocation of resources on a global scale.

In short, trade and investment together are fueling demand for cross-border RMB investment and financing demands. This demonstrates that financial support for the real economy is not an abstract slogan, but a concrete and multifaceted agenda. Enabling companies to participate more deeply in globalisation is a key function of today’s financial system.

Recent trade data reinforces this momentum. In the first quarter, China’s imports and exports grew by 15% year-on-year, with imports surging nearly 20%.

This leads to a more balanced, high-volume flow of goods in and out of the country, a sign of deeper global integration.

At the company level, this shift is even more visible. The average share of overseas revenue among China’s A‑share listed firms rose from 12.3% in 2018 to 18.2% in 2024, while returns from overseas investments climbed steadily as well.

In simple terms, Chinese companies are not going global for the sake of it, they are doing so because it delivers real growth and business value.

RMB as a global financing currency: A window of opportunity

In recent years, the RMB has rapidly strengthening its role as a financing currency. According to the People’s Bank of China’s RMB Internationalisation Report (2025), the RMB now ranks among the top three currencies in global trade finance, even climbing to second place. Its market share has jumped from around 2% to roughly 7% in just a few years.

Meanwhile, the bond market tells a similar story. Outstanding RMB-denominated international bonds have more than doubled since 2019. “Panda bonds” (issued in mainland China by foreign entities) and “dim sum bonds” (issued in Hong Kong) are both seeing strong growth.

Even more striking is the rise in RMB-denominated cross-border lending. By the end of 2024, such lending exceeded RMB 2 trillion, accounting for nearly half of all foreign currency loans extended abroad. Meanwhile, RMB-denominated cross-border transactions for intercompany financing reached RMB 7.3 trillion, up 9% year-on-year, a strong performance amid an increasingly challenging global environment.

Policy is also evolving to support this shift. Earlier this year, Chinese regulators raised the ceiling on how much domestic companies can lend to their overseas affiliates, effectively giving firms more flexibility to deploy RMB capital globally.

When a Chinese parent company lends RMB directly to its overseas subsidiaries, they can reinvest overseas for procurement, services, or debt repayment. Once these projects generate revenue or profits, companies are free, subject to local regulations, to either reinvest the funds overseas or repatriate them to China.

Importantly, companies are no longer required to bring those funds back to China. By giving businesses greater flexibility and allowing market forces to drive decisions, policymakers are helping strengthen the RMB’s role as an international financing currency while providing more effective support for real economic activity.

Geopolitical tensions have tightened global liquidity and complicated monetary policymaking, particularly in the United States. Rising energy prices have pushed inflation higher, with US consumer prices accelerating in March and highlighting the persistence of inflationary pressures.

At the same time, the US labor market presents a mixed picture. While its unemployment rate has edged down, labor force participation has also declined to its lowest level since late 2021, suggesting that part of the improvement reflects workers leaving the labor market rather than stronger job creation.

As a result, the US Federal Reserve faces a dilemma: raising interest rates could help contain inflation but risks further weakening employment, while cutting rates could support growth and jobs but potentially reignite price pressures. This policy dilemma continues to create uncertainty in global financial markets.

China, by contrast, is maintaining a relatively accommodative monetary stance. RMB interest rates across deposits, loans, and government bonds remain low compared to other major currencies and are expected to stay stable or decline over the next couple of years.

That translates into one key advantage: lower financing costs. Surveys of companies in Southeast Asia confirm this. The biggest reason firms choose RMB financing is cost efficiency, followed by access to the China market and exchange rate stability.

Investor behaviour backs this up. A recent issuance of offshore RMB green sovereign bonds in London was nearly seven times oversubscribed, clear evidence of strong global appetite for RMB assets.

At the same time, the RMB is widely expected to appreciate gradually over the long term, supported by China’s economic fundamentals and technological progress. Crucially, this appreciation is likely to be steady rather than volatile, an important trait for any currency aspiring to global status.

The trend in Hong Kong’s offshore RMB interbank lending rates also highlights the currency’s financing appeal. Rates across most maturities remain below 2% and have been gradually declining, creating a low-cost and efficient funding environment. This presents a valuable opportunity for the RMB to further strengthen its role as an international financing currency.

What comes next?

To build on this momentum in establishing the RMB as a truly global currency, three priorities stand out:

Expand RMB assets offshore

Regular issuance of RMB government bonds and central bank bills overseas will help strengthen offshore markets and provide reliable benchmarks for investors.

Strengthen Shanghai–Hong Kong financial synergy

As China’s two leading financial hubs, Shanghai and Hong Kong play complementary roles. Better integration between them can better support companies expanding globally and enhance China’s role in international capital markets.

At the same time, China needs to develop an offshore financial system that is fully aligned with Shanghai’s role as an international financial centre, in order to better support high-quality global expansion by Chinese companies. Helping firms build global supply chains and enhance their international competitiveness is a key part of this mission. As Chinese companies continue to expand overseas, stronger financial coordination between Shanghai and Hong Kong will provide more robust support for their global operations.

Keep the exchange rate stable and market-driven

A market-driven exchange rate, combined with overall stability, is crucial. Over time, a credible, predictable exchange rate will support both inbound and outbound investment and reinforce international confidence in the RMB.

Conclusion

Two principles are central to China’s exchange rate approach: a market-oriented mechanism based on supply and demand, and the maintenance of overall stability to avoid excessive volatility.

In the long run, this points to a gradual and steady appreciation of the RMB. This trajectory is consistent with the currency’s development as a strong global currency and supports both international trade and cross-border investment and financing.