- About 7% of China's foreign trade in the first quarter was done in transactions denominated in yuan, up from 0.5% a year earlier, illustrating the Chinese currency's rapidly growing—though still small—international role.
- The volume was up from 309.3 billion yuan in the fourth quarter of 2010, or 5.7% of foreign trade, and was nearly 20 times the 18.4 billion yuan in such deals in the first quarter of 2010, according to earlier data from the People's Bank of China.
- Until a couple of years ago, effectively all of China's foreign trade was done in dollars or, to a much lesser extent, other foreign currencies, a byproduct of the country's tight controls on the use of its currency outside its borders.
- Since the global financial crisis, however, China's leaders have become increasingly determined to reduce the use of the U.S. dollar. In recent months, they have aggressively pushed the expansion of yuan trading outside mainland China, setting up Hong Kong as a trading hub and encouraging yuan trading in major financial centers such as New York and London. They also have entered into deals with Russia and Brazil to give companies the option of settling trade deals in local currency rather than in dollars. And Chinese officials have allowed some foreign firms to issue bonds in yuan, including Caterpillar Inc., McDonald's Corp. and Unilever NV.
- Mark Williams, an economist at research firm Capital Economics, said there is likely a limit to how much foreigners will be willing to accept in yuan payments, because there are still strict curbs on their ability to invest those assets, the result of the still-extensive capital controls that help Beijing manage the yuan's exchange rate. "There's a contradiction between these aims to internationalize the currency on the one hand and to maintain your hold on the value of the currency on the other," he said. "You cannot achieve both those things over the long run."
[Feb 11, 2011: NYT - In China, Tentative Steps Towards a Global Currency]
[Dec 14, 2010: WSJ - Offshore Trading in Yuan Takes Off]
[Jul 21, 2009: China's Plans for Replacing the Dollar]