De‑Dollarization Reaches Critical Phase: China’s Yuan Adoption for Cross‑Border Flows Tops 50%

The de‑dollarization milestone has been reached as China’s yuan benefits from the Trump administration’s uncertain foreign‑economic policy. While still in its nascent stages, the yuan’s internationalization is growing rapidly, doubling its share of international payments since 2022.

Milestone Reached: China’s Yuan Usage Grows Over 50% for National Cross-Border Flows

The internationalization of the yuan, a part of China’s growing de-dollarization efforts, has been progressing steadily, recently reaching new heights. According to the Chinese State Administration of Foreign Exchange, cross‑border flows settled in yuan have grown to over 50% of total volumes, a testament to the currency’s strength.

While still second to the U.S. dollar, analysts say the yuan is on a strong path to expand its international role, aided by uncertainty surrounding the dollar under the Trump administration.

While the yuan still accounts for less than 4% of all international trade, it has doubled its figures since 2022. In addition, as Chinese banks transact using CIPS, a national SWIFT equivalent, this number might be undercounted, said Josh Lipsky of the Atlantic Council.

The growth is also related to the shift to national currencies that China’s top trade associates, including Russia, have performed amidst a backdrop of increased sanctions. The international trade between the two nations has increased exponentially as sanctions closed the door for trade with Western countries, transforming the Russian economy.

International yuan adoption is expected to maintain an upswing with debt as its new front. Hungary has pioneered the space, having issued $5 billion in panda bonds, paving the way for similar sovereign offers to appear. Russian companies had been greenlighted to issue yuan-nased papers, and Brazil is reportedly considering similar actions.

De-dollarization has also reached the foreign reserve arena, as China steadily abandons U.S. debt. The country’s treasury holdings reached a 16-year low in April, affected by the current trade war discussions.

In contrast, China has been increasing its gold reserves, hitting a 10-month purchase streak in August, as it pivots to less risky, safe-haven assets.