China Strengthening Yuan via Belt and Road Initiative

China is promoting the yuan internationally by using loans approved through its Belt and Road Initiative (BRI), which has already increased the yuan's proportion of global payments to historic levels. China's policy banks signed a number of yuan-denominated loan contracts with foreign lenders during the Belt and Road Forum in Beijing, which concluded on Wednesday.

Many of the 130 countries in attendance belonged to the Global South, while the majority of Western nations stayed absent, and the presence of Russian President Vladimir Putin lent support to Chinese President Xi Jinping's aim for a new, multi-polar world order.

"You can see that the countries that are basically using the RMB for trade settlements are mostly countries that have visited Beijing or have come up with strategic agreements with Beijing, Russia being the most obvious one," said Alicia Garcia Herrero, Asia Pacific chief economist at Natixis.

Geostrategic tensions and high US interest rates have aided Beijing in increasing the yuan's acceptability in some countries. According to SWIFT data released on Oct 18, the yuan - also known as the RMB - accounted for 3.71 percent of global payments by value in September, a record high and nearly doubling from 1.91 percent in January. Nonetheless, the yuan's share is insignificant when compared to the dollar's 46.6 percent.

Rising Sino-US competition, as well as the Russia-Ukraine war, both pushed Beijing to persuade more countries to use the yuan for settlement, despite the currency's depreciation against the dollar.