renminbi Jie Zhao/Getty Images

The Retreat of the Renminbi

The dramatic fall of the renminbi since 2014 reflects the slowing of China’s debt-fueled economic growth and the accumulation of default risks. Unlike just a few years ago, the world now has little, if any, reason to continue stockpiling China's currency.

NEW YORK – “The globalization of the yuan seems remorseless and unstoppable,” pronounced The Economist in April 2014. Indeed, use of the Chinese yuan, or renminbi (RMB), in global payments would double between then and August 2015, to 2.8% of the total, making China’s currency the fourth most used in the world.

Since then, however, this growth has been almost entirely reversed. The RMB’s share in global payments has fallen to 1.6%, knocking it down to number seven. Its use in global bond markets is down 45% from its 2015 peak. RMB deposits in Hong Kong banks are also down by half. And whereas 35% of China’s cross-border trade was settled in RMB in 2015 (with most of the remainder in dollars), that share has fallen to about 12% today.

The RMB’s reversal of fortune reflects four factors in particular.

We hope you're enjoying Project Syndicate.

To continue reading, subscribe now.


Get unlimited access to PS premium content, including in-depth commentaries, book reviews, exclusive interviews, On Point, the Big Picture, the PS Archive, and our annual year-ahead magazine.;

Handpicked to read next

  1. verhofstadt40_PAULFAITHAFPGettyImages_borisjohnsonspeakingarms Paul Faith/AFP/Getty Images

    Boris’s Big Lie

    Guy Verhofstadt

    While Boris Johnson, the likely successor to British Prime Minister Theresa May, takes his country down a path of diminished trade, the European Union is negotiating one of the largest free-trade agreements in the world. One really has to wonder what the "buccaneering" Brexiteers have to complain about.

Cookies and Privacy

We use cookies to improve your experience on our website. To find out more, read our updated cookie policy and privacy policy.