Source: scmp.com
Image content: The image shows four men in suits standing in front of a blue backdrop at a formal event. The screen behind them reads “Action Plan for Collaborative Development of Shanghai and Hong Kong International Financial Centres,” indicating a signing ceremony between related government and financial offices.
Summary
China is intensifying efforts to reduce global reliance on the U.S. dollar by promoting wider international use of the renminbi, including through a new international operations center for the digital yuan and expanded cross-border payment infrastructure. At the Lujiazui Forum, PBOC Governor Pan Gongsheng advocated a multipolar currency system, citing risks of a dominant currency’s weaponization, and outlined pilots for credit-based relending, trade refinancing, and green finance tools in Shanghai. Complementing these initiatives, Hong Kong and Shanghai signed a landmark pact to deepen financial cooperation, broaden Stock Connect to more asset classes, and enhance cross-border settlements and digital yuan usage—positioning Hong Kong as a springboard for Chinese firms’ global expansion. Despite policy momentum, structural hurdles remain, including capital controls, limited offshore RMB circulation due to China’s trade surplus, and concerns over the RMB’s attractiveness as a store of value.
Key Points
- PBOC promotes a multipolar currency system to reduce dollar dominance.
- New international operations center aims to expand digital yuan’s cross-border use.
- Shanghai pilots include trade refinancing, relending tools, and expanded green finance.
- Hong Kong–Shanghai pact broadens market connectivity and digital yuan adoption.
- Persistent obstacles: capital controls, surplus-limited RMB circulation, and store-of-value concerns.