The RMB’s offshore revival is real — so are its limits

From 2012 to 2013, I was a participant in the SWIFT-organised RMB Working Group in Hong Kong to help monitor the offshore RMB market’s rapid expansion. It brought together the major banks, payment companies, accounting firms and advisory firms working to build out the offshore RMB ecosystem. The crowning achievement of the RMB back then was overtaking the New Zealand dollar in global transaction volume, an oddly modest benchmark for the currency of the world’s second-largest economy. 

Fourteen years later, the RMB’s international role is clearly more substantial. Its share of global foreign exchange trading has risen steadily, sharply narrowing the gap with several other established currencies.

Yet the scale remains modest. The dollar was still on one side of 89% of all foreign exchange trades in 2025, compared with 8.5% for the RMB. That disparity is what makes the current revival in RMB borrowing worth examining.

Small-scale but significant

In the first half of 2026, the issuance of Panda bonds — RMB debt sold onshore by foreign issuers — reached roughly 160 billion RMB (US$23.8 billion), up 68% from a year earlier. Foreign banks, multinationals, sovereigns and multilateral institutions are appearing more often in the market. Offshore CNH (Chinese Yuan Renminbi Offshore) or Dim Sum borrowing has also revived.

This is real progress. But gross issuance alone tells us little about the RMB’s wider international role. The more useful question is what this growing market is actually being used for. China’s major banks provide a clear answer: much of the underlying demand is commercial rather than speculative. It comes from the practical needs of Chinese companies trading, investing and operating abroad, and from foreign entities that need to raise money in China.

Bank of China, for example, has expanded integrated RMB and foreign-currency cash pooling for multinational companies across 26 Chinese provinces and municipalities. CITIC Bank offers Chinese multinationals a bundled cross-border service combining cash pooling, global cash management, foreign exchange and supply chain finance, covering customers’ overseas entities in 77 countries.

This is not glamorous, but it is what a slow, steady process of internationalisation looks like in practice. A Chinese manufacturer with a subsidiary in Vietnam, a contractor working in the Middle East or a logistics company moving goods to Europe needs to collect payments, manage liquidity, hedge currencies and finance suppliers. Chinese banks are increasingly able to offer those services in RMB across borders where it makes commercial sense and in other currencies where it does not.

Staying China-centric

The banks also reveal that this remains a predominantly China-centric system. The typical customer is a Chinese exporter, an overseas subsidiary of a Chinese company or a foreign firm trading directly with China. Industrial Bank describes financing a Suzhou electronics company’s overseas acquisition through its Hong Kong subsidiary. The financing combined a Hong Kong-dollar loan, a cross-currency swap and foreign exchange. The transaction demonstrates the growing sophistication of Chinese banks’ international operations. It also makes a basic point: even Chinese companies buying assets abroad often borrow in HK dollars or US dollars, rather than RMB.

That is meaningful. Foreign sovereigns and multilateral institutions are increasingly willing to use China’s domestic market as a genuine funding source. The immediate attraction is clear. For the previous two decades leading up to 2022, Chinese central government bond yields have almost always exceeded US Treasury yields. That relationship has since inverted sharply, making nominal RMB borrowing materially cheaper for high-grade issuers.

Less appetite for holding RMB

But borrowing RMB is not the same as wanting to hold it. Bank of China’s own disclosures highlight hedging services linked to Panda bonds for foreign sovereigns, multilateral institutions and foreign banks. A borrower can issue RMB debt and then hedge or swap away much of the currency exposure. The attraction may be cheap funding or access to a new investor base, rather than a lasting desire to own RMB assets or assume RMB risk.

However, Chinese banks are rapidly building out the infrastructure that makes RMB finance easier to use outside China. They are expanding clearing networks, China’s Cross-Border Interbank Payment System (CIPS) access and offshore liquidity arrangements to reduce friction around payments, trade finance and hedging. Hong Kong remains at the centre of this process. Yet solving for financial plumbing is not the same as global demand. A clearing arrangement makes RMB transactions possible. It does not establish that multinational companies, institutional investors or central banks want to hold RMB assets at scale without a China-related commercial need.

Russia shows why that distinction matters. Sanctions have pushed Russia-China trade overwhelmingly into RMB, virtually eliminating the dollar in their bilateral payments. But that is de-dollarisation, not necessarily RMB internationalisation. Russia has virtually eliminated its reliance on the dollar by concentrating activity within a narrower set of China-linked payment channels and currency markets. It has not created a broad international investor base willing to hold RMB assets. Russia is therefore an extreme case, not a template for voluntary RMB internationalisation.

The clearest evidence lies in official reserves. The IMF’s Currency Composition of Official Foreign Exchange Reserves, or COFER, data put the RMB at just 1.99% of global allocated foreign exchange reserves in the first quarter of 2026. That remains a strikingly small share for the currency of an economy at the centre of global manufacturing and trade.

Reserve composition is not a complete measure of international currency use, but it does capture a more demanding test than trade settlement or cheap borrowing: whether central banks choose to hold RMB assets as a long-term store of value. The revival in RMB borrowing is thus best understood as a meaningful but segmented form of internationalisation. The RMB has become more useful for trade, treasury management and selected funding transactions within China’s commercial orbit. It has not yet become a currency that central banks or global investors choose to hold at scale outside China’s commercial orbit.

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