China's Yuan Seizes Record Share in Global Payments, Challenging Dollar Dominance

The Chinese yuan has reached a significant milestone, as evidenced by its record-high share in global payments transactions, according to data from the Society for Worldwide Interbank Financial Telecommunication SWIFT. This development signifies an important step forward for China's efforts to enhance its currency's influence overseas and challenge the dominance of the US dollar within the international monetary system.

In July, the yuan secured its position as the fourth-most used payment currency globally with a share of 4.74 in global transactions, marking an increase from June's figure of 4.61. This uptick was reported by SWIFT, which serves as the world's leading interbank messaging service.

Hong Kong economy

Opinion - Shan Weijian

Opinion How the yuan can help Hong Kong outcompete Shenzhen

To enable Hong Kong banks to provide renminbi services, facilitating economic freedom on a new level for the city would be a strategic move.

For decades, Hong Kong has celebrated as The Pearl of the Orient and the most renowned economic success story in southern China's landscape. However, in reality, Hong Kong has lagged behind its mnland counterpart Shenzhen in terms of growth.

There exists a path for Hong Kong to reclm its position:

With Hong Kong government's goal to establish the city as a headquarters economy, attracting businesses from around the globe to settle here could be part of this strategy. An opportunity to boost this eavor lies in granting monetary authorities in Beijing and Hong Kong permission for Hong Kong banks to offer renminbi-based banking services onshore. This would enable companies headquartered in Hong Kong to borrow and deposit renminbi for their mnland operations, thereby leveraging Hong Kong's economic freedom.

In 1993, Hong Kong's GDP was approximately twenty times that of Shenzhen's; today, the latter has grown nearly eighty-sixfold since its designation as a special economic zone in 1980. In contrast, Hong Kong saw an increase only two-point-three-fold according to World Bank statistics.

This rapid development was facilitated by Shenzhen's status as a special economic zone with policy incentives provided by Deng Xiaoping, the Chinese paramount leader at that time. He likened its establishment to a tough battle, emphasizing self-reliance and innovation.

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