Companies across the globe are progressively employing the Chinese yuan in an array of contexts, as noted in a recent study by Standard Chartered. These contexts range from settling trade transactions to financing supply chains.
A growing number of international corporations are adopting the use of the Chinese renminbi (RMB). Statistics from a Standard Chartered study reveal that 23% of revenues and 25% of costs are subject to the influence of this currency. However, the report also points out that only 14% of debt is in RMB, indicating a discrepancy between operating exposure and the currency employed for financing.
The study suggests that the uptake of RMB is increasingly motivated by operational necessities of corporations rather than currency positioning. The main factors encouraging its adoption are trade settlement, supply chain financing, alignment of balance sheets, and management of foreign exchange and interest rate exposure.
The adoption patterns of the RMB vary across different regions. For instance, corporations in Greater China and North Asia are extending their use of RMB beyond settlement to include funding and liquidity management. The uptake in Southeast Asia is primarily driven by supply chain needs, whereas in the Middle East and parts of Africa, the usage is concentrated in the energy and infrastructure trade sectors. In Europe and the Americas, the capital market issuances and selective funding diversification are emerging as significant starting points.
Karen Ng, the head of China opening and RMB internationalization at Standard Chartered, stated, “Many corporations already have significant RMB exposure through trade, procurement, and supply chains. As the market infrastructure deepens and liquidity expands, the adoption is increasingly being driven by operational needs, including trade settlement and balance sheet alignment.”
The report titled “Renminbi in Motion for Corporates” is based on a survey involving nearly 300 global corporations across 19 sectors.
Why are corporations worldwide increasingly using the Chinese yuan?
The use of the Chinese yuan is growing due to operational needs including trade settlement, supply chain financing, balance sheet alignment, and managing foreign exchange and interest rate exposure.
How does the adoption of the Chinese yuan vary across different regions?
Adoption patterns differ by region. Corporations in Greater China and North Asia are expanding its use beyond settlements to include funding and liquidity management, while in Southeast Asia, adoption is largely driven by supply chain needs.
What is the percentage of revenues and costs carrying exposure to the Chinese yuan, according to the report?
The report indicates that 23% of revenues and 25% of costs are subject to the influence of the Chinese yuan.
