Internationalization of the yuan and cross-border settlements between China and Africa

Publication type Article
Status Published
Occupation: Research Fellow, Centre for the Study of the Russian-African Relations and African States’ Foreign Policy, Institute for African Studies, Russian Academy of Sciences
Affiliation: Institute for African Studies, Russian Academy of Sciences
Address: Russian Federation, Moscow
Journal nameAsia and Africa Today
EditionIssue 7

One of many manifestations of the ongoing deep transformation of the world system can be seen in the current relative weakening of the role of the US dollar and other traditional reserve currencies in the world economy and the increasing role of the Chinese yuan. The objective cause for this phenomenon is the ascent of the economic power and international influence of the PRC and the country's position in international trade, investment and filling financial flows. Objective factors are combined with China’s purposeful and smart state policy in the field of internationalization of the yuan (IY).

The strategy of IY has gone from the “old triad” scheme (yuan settlements of cross-border trade and investment + establishing offshore yuan financial centers + growth of bilateral local currency swaps) to a new “triad” (trading yuan-nominated oil futures + speeding up the opening of domestic financial markets + encouraging the use of the yuan along the “Belt and Road”, the strategy has also changed from fully developing the offshore financial market to encouraging the opening of the onshore market.

Taking into account the role of the PRC in foreign trade and investment process in Africa, this geographic vector of IY is one of the most successful. IY here develops in two aspects: removing, through mutual settlements in the national currency, the bottlenecks of cooperation arising from the shortage of foreign currency in African economies and the introduction of new financial instruments and solutions to take the settlements out of the control of US dollar, as well as away from other clearing schemes controlled by the West.

KeywordsChina, Africa, diaspora, internationalization of the yuan, settlements in national currencies, clearing, barter, cross-border platforms
Publication date13.07.2022
Number of characters23151
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