RMB Internationalization Is Accelerating, but Is More Likely to Lead to Multipolar Coexistence Than to Replace the Dollar
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RMB Internationalization Is Accelerating, but Is More Likely to Lead to Multipolar Coexistence Than to Replace the Dollar
China has formed an RMB usage ecosystem across trade settlement, resource investment, payment networks, and commodity futures; markets where Chinese buyer power is stronger, such as iron ore, may see deeper RMB invoicing first, but a full-fledged “petro-yuan” remains a long-term vision.
- In 2025, RMB settlement rose to a record 29% of China’s goods trade.
- RMB internationalization has accelerated since 2022 even as the RMB faced depreciation pressure, indicating that geopolitics and payment resilience have become more important drivers.
- Iron ore has greater near-term potential for RMB adoption than oil, because China has stronger buyer power, industrial demand, and centralized procurement capacity.
- China’s commodity-related outward investment reached about US$270 billion by 2024, growing at an average annual rate of about 14% over the past decade, and has gradually shifted toward strategic minerals and operational control.
- The RMB’s convertibility, financial market depth, and global network effects still lag significantly behind the dollar; the most likely outcome is a more layered and multipolar global monetary system.
Report interpretation
Overview
The report examines the path by which the RMB extends from cross-border trade settlement to commodity invoicing, financing, hedging, and reserve recycling. China has reduced the practical transaction costs of using RMB through its cross-border payment system, central bank swap arrangements, offshore clearing banks, Belt and Road financing, digital RMB pilots, and RMB-denominated commodity futures. Conflicts in the Middle East, the Russia-Ukraine war, and sanctions risks in the dollar payment system have further increased countries’ demand for payment resilience and currency diversification, accelerating the rise of the RMB’s role in China-related trade and commodity markets.
Core views
RMB internationalization has shifted from pursuing global reserve-currency status toward a more pragmatic “use-case internationalization.” In the short term, the main breakthroughs will come in trade chains where China is a core buyer, investor, financier, or infrastructure provider. RMB adoption in iron ore is more realistic than a petro-yuan, but a change in settlement currency does not equal a change in pricing benchmark. The dollar remains dominant thanks to deep capital markets, safe and liquid assets, trade financing, hedging tools, and global network effects. The RMB is more likely to expand its share in a fragmented global financial system than to fully replace the dollar.
Analysis framework
The report combines the policy and infrastructure evolution of RMB internationalization, cross-border trade settlement data, regional adoption, import dependence in energy and metals, overseas resource investment cases, the opening of RMB commodity futures, and a comparison of the dollar’s and RMB’s shares in the global financial system. It separately evaluates the difficulty of achieving settlement, invoicing, pricing, financing, hedging, and reserve recycling.
Methodology notes
Prioritize expanding the RMB’s use as a medium of exchange and a specific unit of account, rather than immediately pursuing fully convertible global reserve-currency status.
This framework emphasizes trade settlement, project financing, bilateral payments, and applications in specific commodity markets, while retaining relatively strong management of capital flows and the exchange rate.
RMB settlement in physical trade and RMB-denominated commodity benchmarks, futures, and hedging tools mutually reinforce each other.
Expanded settlement scale can create demand for RMB hedging, while deeper RMB derivatives markets also help physical transactions adopt RMB invoicing and pricing.
International currency status depends on a complete ecosystem consisting of pricing, financing, hedging, reserve assets, and payment networks, rather than a single settlement convention.
The dollar’s existing participant scale and financial infrastructure form a self-reinforcing cycle, so the RMB’s expansion of settlement share alone is insufficient to directly weaken the dollar’s overall dominance.
Economies seek to reduce reliance on a single payment system, rather than simply replacing dollar dependence with RMB dependence.
Local-currency settlement, regional payment arrangements, bilateral netting, gold, and alternative payment channels may all benefit, with the RMB being one important beneficiary.
Asset mapping & comparison
Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).
- RMB (CNY/CNH)Core beneficiary asset and research subject
- Strengths
- China has a vast trade scale, while its cross-border payment system, swap arrangements, offshore clearing network, and commodity futures ecosystem continue to improve.
- Weaknesses
- The capital account is not yet fully open, and safe-asset supply, market liquidity, legal predictability, and the global hedging system remain insufficient.
- Comparison
- It has strong usage potential in China-related trade, but its shares in global payments, reserves, financing, and pricing remain significantly lower than the dollar’s.
- Risks
- RMB depreciation pressure, capital flow management, insufficient offshore liquidity, and fluctuations in confidence among overseas participants may slow the internationalization process.
- US Dollar (USD)Dominant benchmark of the current global monetary system
- Strengths
- It has deep capital markets, a large supply of safe and liquid assets, mature trade financing and hedging tools, and powerful network effects.
- Weaknesses
- Sanctions, reserve freezes, and payment restrictions are prompting some economies to seek alternative channels.
- Comparison
- The RMB may erode part of the dollar’s share in China-related trade settlement, but it is unlikely to challenge the dollar’s dominance in pricing, financing, reserves, and hedging in the short to medium term.
- Risks
- Geopolitical fragmentation and payment-system diversification may gradually reduce some transactions’ reliance on dollar infrastructure.
- Iron OreOne of the most realistic commodities for near-term RMB invoicing and benchmark penetration
- Strengths
- China is the dominant end-buyer, and centralized procurement, RMB indices, and Dalian Commodity Exchange futures provide a foundation for RMB use.
- Weaknesses
- Global trade is still influenced by existing international benchmarks and non-RMB financing systems.
- Comparison
- Because China’s buyer power is stronger, the near-term feasibility of RMB adoption in iron ore is higher than that of a petro-yuan.
- Risks
- Limited acceptance by overseas miners, benchmark liquidity, price transparency, and cross-border hedging capacity may restrict promotion.
- Crude Oil and Liquefied Natural GasMain application scenarios for the petro-yuan narrative
- Strengths
- China has huge import demand, and some suppliers that are sanctioned or seeking payment diversification have incentives to adopt RMB.
- Weaknesses
- Global oil prices, financing, and risk management still mainly rely on Brent, WTI, and the dollar system.
- Comparison
- RMB settlement may increase, but it remains far from forming a complete pricing and reserve recycling system comparable to the petrodollar.
- Risks
- Energy suppliers may accept RMB settlement only without adopting RMB pricing, leaving dollar benchmark risk in place.
- GoldAlternative reserve and insurance asset in monetary system diversification
- Strengths
- It does not rely on the payment network of a single country and can serve as a hedge against geopolitical and reserve-freeze risks.
- Weaknesses
- It does not directly provide trade financing or payment infrastructure and cannot fully replace the functions of a transaction currency.
- Comparison
- Gold benefits from de-risking together with the RMB, but gold mainly plays a reserve and insurance role, while the RMB focuses more on transactions and settlement.
- Risks
- Changes in real interest rates, dollar trends, and policy demand may trigger price volatility.
Key data
- Share of RMB settlement in China’s goods trade29% in 2025A record high, above the previous peak in 2015.
- Increase in offshore RMB depositsNearly 60% since the pandemicRMB liquidity pools in major offshore centers have expanded significantly.
- China’s commodity-related outward investmentAbout US$270 billion in 2024Average annual growth of about 14% over the past decade.
- China’s resource import dependenceCrude oil about 74%; natural gas about 41%; iron ore, copper, and nickel all above 75%High import dependence and large buyer scale jointly strengthen the motivation and bargaining power to promote RMB settlement.
- Major commodity derivatives open to overseas institutions38 contractsCovering domestic special products such as crude oil, copper, and iron ore.
- Global foreign exchange trading shares of the dollar and RMBDollar 89%; RMB 8.5%Shows that the RMB’s international use has reached scale, but there remains a significant gap with the dollar.
- Trade finance shares of the dollar and RMBDollar 81%; RMB 8.0%The dollar continues to dominate global trade finance.
- Global foreign exchange reserve shares of the dollar and RMBDollar 57%; RMB 2.0%The RMB remains relatively weak in reserve recycling and safe-asset supply.
- Global payment shares of the dollar and RMBDollar 50%; RMB 3.1%RMB payment infrastructure continues to expand, but global network effects remain limited.
Impact & implications
The RMB’s share is most likely to rise steadily in transactions where China dominates demand, financing, or supply chains, especially in iron ore, critical minerals, and some energy trade. The expansion of RMB settlement will increase offshore RMB liquidity and demand for RMB hedging tools, and enhance the importance of Chinese commodity benchmarks. However, the dollar will continue to dominate reserves, financing, hedging, and most commodity pricing. For investors, it is more important to focus on the gradual diversification of payment systems and commodity benchmarks than to bet on a comprehensive near-term replacement of the dollar monetary system.
Risks
- Capital controls and exchange-rate management limit the RMB’s full convertibility and attractiveness as a global reserve currency.
- The liquidity, international participation, and pricing influence of RMB-denominated commodity futures still lag behind global benchmarks such as Brent, WTI, and LME.
- Growth in RMB settlement may be misread as a simultaneous rise in RMB pricing and reserve-currency status.
- Concerns over policy transparency, legal predictability, repatriation of funds, and market access may restrain participation by overseas institutions.
- De-risking promotes diversification rather than a single RMB substitution; other local currencies, regional payment arrangements, and gold will also share incremental demand.
- Geopolitical easing, reduced dollar payment restrictions, or sustained RMB depreciation could slow RMB adoption.
- China faces a long-term policy trade-off between expanding international RMB use and maintaining capital account controls and domestic financial stability.
What to watch
- The share of RMB settlement in China’s goods trade and the settlement structure of imports and exports.
- Transaction volume, number of participating institutions, and regional coverage changes in the cross-border payment system.
- RMB deposit scale and financing costs in major offshore centers.
- RMB settlement or pricing agreements signed between China and suppliers of energy, iron ore, and critical minerals.
- Overseas participation, trading volume, open interest, and correlation with global benchmarks for RMB-denominated commodity futures.
- The scope of long-term iron ore contracts adopting RMB indices and Chinese spot indices.
- The scale of commodity-related outward investment and the degree of control by Chinese-funded enterprises over production, logistics, offtake, and operations.
- The RMB’s shares in global payments, trade finance, foreign exchange trading, and official reserves.
- Policies related to capital account opening, fund repatriation, exchange-rate policy, and the RMB cross-border payment system.
- Synchronous changes in gold and other non-dollar currencies in global reserves and trade settlement.