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US hegemony pushes the yuan to go global

The yuan is going global at an increasingly faster pace, with the currency's cross-border transactions surging by about 24 percent and becoming the world's 5th most often used payment currency in 2019. Experts said that this trend is partly due to overseas companies being increasingly inclined to shun the US dollar for fear that their business will be affected by the Trump administration's hostile policies toward China.

The total amount of cross-border yuan payments and receipts by banks was 19.67 trillion yuan ($2.83 trillion)in 2019, surging by 24.1 percent on a yearly basis and reaching a record high in terms of volume, according to the 2020 RMB International Report, released by the People's Bank of China (PBC) on Friday evening.

The market share of the yuan in the foreign exchange trading was 4.3 percent, up 0.3 percentage point compared to 2016. The report also showed that the yuan ranked 5th as the most often used global payment currency, with a market share of 1.76 percent.

"In general, it is clear to see that the yuan is speeding up the process of going global," Zhou Yu, director of the Research Center of International Finance at the Shanghai Academy of Social Sciences, told the Global Times on Saturday. 

Several Chinese economists attributed this trend in part to the US' hegemony, which they said is frightening global companies away from the US dollar. 

"Overseas companies that have business interactions with China are increasingly inclined to shun the US dollar, for fear their business will be affected by Trump's hostile policies toward China," Xi Junyang, a professor at the Shanghai University of Finance and Economics, told the Global Times on Saturday. 

Xi said the US has demonstrated a clear tendency toward isolationism, causing friction in a number of countries. This is also making people afraid of holding the US dollars out of fear of financial retaliation by the US government. 

"The more sanctions the US government rolls out against China, the more firmly China will push the yuan's internationalization, so that China's economy will no longer rely on the greenback," Xi said. 

Zhou also noted that the US dollar has depreciated because of the US' economy's slide and quantitative easing policies, moving markets away from the greenback and toward currencies that are more stable, such as the yuan. 

"I believe the time is right for the yuan to go global, with US protectionism triggering disgust in the international community and the Chinese economy rising," Zhou said, adding that the yuan's internationalization will be further enhanced as China takes measures to liberalized capital accounts. 

A PBC survey on hundreds of trading companies showed that about 84 percent of the enterprises have chosen yuan as their major currency in cross-border settlement, mainly to "mitigate foreign exchange risks," the PBC report noted.