China’s Quiet Currency Shift: How the Yuan Is Changing Trade Finance in Asia
Over the past few years, a quiet transformation has been unfolding in the way trade is financed across Asia. It’s not a headline-grabbing revolution, but a steady shift driven by China’s efforts to internationalise the yuan.
From regional settlements to digital infrastructure, the yuan is gaining ground as a currency for trade and financing. For exporters and importers in Asia, it opens new options—some promising, others still evolving.
A Growing Role in Cross-Border Trade
In March 2025, the yuan reached a new milestone. Over half of China’s cross-border trade, 54.3 percent, was settled in yuan. That’s up from just 30 percent a few years ago. Across the region, more businesses are open to pricing their goods in yuan or settling invoices using Chinese banking channels.
At a global level, the yuan has become the world’s second most used currency for trade finance, overtaking the euro. It now accounts for around 6 percent of global trade finance transactions. This is modest compared to the dollar, but rising quickly.
These numbers reflect a clear trend: Asian businesses are gradually diversifying how they manage currency and finance risk.
Building the Rails: From CIPS to Digital Yuan
China’s strategy is not just about policy. It’s also about infrastructure.
The Cross-Border Interbank Payment System (CIPS), China’s alternative to SWIFT, has expanded rapidly. It now connects over 4,900 institutions in nearly 190 countries. A growing share of these are in Southeast Asia, the Middle East, and Africa.
In 2025, six foreign banks, including institutions from Singapore and the UAE, joined CIPS as direct participants, giving their clients better access to yuan-denominated payments.
Alongside this, China is piloting cross-border use of its digital yuan (e-CNY). While still in its early stages, the digital currency is part of a broader effort to create faster, more efficient settlement pathways outside traditional systems.
Strategic Considerations Behind the Push
China’s push to increase yuan usage is shaped by several overlapping goals:
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Reducing reliance on the US dollar in cross-border trade
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Supporting Chinese firms with smoother settlement options
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Building resilience in the face of geopolitical and financial pressures
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Strengthening economic ties with key trading partners in Asia, Africa, and the Middle East
These objectives are long-term. Adoption will depend on how practical and competitive yuan-based options are for businesses across the region.
What This Means for Asian Exporters
For exporters and supply chain players in Asia, these changes are worth watching.
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More payment options: With wider yuan access, suppliers may be able to settle transactions faster and avoid FX conversion costs, especially when dealing with Chinese buyers or buyers within CIPS-connected countries.
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New financing flows: Banks are beginning to offer trade loans, receivables financing, and letters of credit denominated in yuan.
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Growing complexity: With multiple currencies, platforms, and financing structures available, businesses must weigh the risks and benefits carefully.
Importantly, the yuan’s rise is not about replacing the dollar. It’s about giving businesses more tools to work with.
Finding Opportunity in a Shifting Landscape
This shift is still unfolding. Some businesses are already benefitting from greater currency flexibility, while others are waiting to see how the regulatory, pricing, and risk factors play out.
At Convergence Capital, we believe that flexible, well-structured supply chain finance can help businesses navigate these changes. Whether you trade in dollars, yuan, or euros, our receivables finance solutions are designed to bridge cash flow gaps and support your growth.
Interested in exploring how supply chain finance can support your exports, regardless of currency? Contact us to learn how we can help structure a solution tailored to your market and buyers.
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