The Start of De-Dollarization: China’s Gradual Move Away from the USD

Visual Capitalist

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May 22, 2024 The Start of De-Dollarization: China’s Move Away from the USD

Since 2010, the majority of China’s cross-border payments, like those of many countries, have been settled in U.S. dollars (USD). As of the first quarter of 2023, that’s no longer the case.

This graphic from the Hinrich Foundation, the second in a three-part series covering the future of trade, provides visual context to the growing use of the Chinese renminbi (RMB) in payments both domestically and globally.  

The De-Dollarization of China’s Cross-Border Transactions

This analysis uses Bloomberg data on the share of China’s payments and receipts in RMB, USD, and other currencies from 2010 to 2024. 

In the first few months of 2010, settlements in local currency accounted for less than 1.0% of China’s cross-border payments, compared to approximately 83.0% in USD. 

China has since closed that gap. In March 2023, the share of the RMB in China’s settlements surpassed the USD for the first time.

DateRenminbiU.S. DollarOther March 20100.3%84.3%15.4% March 20114.8%81.3%13.9% March 201211.5%77.1%11.5% March 201318.1%72.7%9.2% March 201426.6%64.8%8.6% March 201529.0%61.9%9.0% March 201623.6%66.7%9.7% March 201717.6%72.5%9.9% March 201823.2%67.4%9.4% March 201926.2%65.1%8.7% March 202039.3%54.4%6.3% March 202141.7%52.6%5.6% March 202242.1%53.3%4.7% March 202348.4%46.7%4.9% March 202452.9%42.8%4.3%

Since then, the de-dollarization in Chinese international settlements has continued.  

As of March 2024, over half (52.9%) of Chinese payments were settled in RMB while 42.8% were settled in USD. This is double the share from five years previous. According to Goldman Sachs, foreigners’ increased willingness to trade assets denominated in RMB significantly contributed to de-dollarization in favor of China’s currency. Also, early last year, Brazil and Argentina announced that they would begin allowing trade settlements in RMB. 

Most Popular Currencies in Foreign Exchange (FX) Transactions

Globally, analysis from the Bank for International Settlements reveals that, in 2022, the USD remained the most-used currency for FX settlements. The euro and the Japanese yen came in second and third, respectively.

Currency20132022Change (pp) U.S. Dollar87.0%88.5%+1.5 Euro33.4%30.5%-2.9 Yen23.0%16.7%-6.3 Pound Sterling11.8%12.9%+1.1 Renminbi2.2%7.0%+4.8 Other42.6%44.4%+1.8 Total200.0%200.0%

The

The full article is available here. This article was published at Visual Capitalist.