The trade war initiated by the United States is actually helping China achieve one of its coveted long-term financial goals – the greater use of its currency, the yuan, in international commerce and financial transactions.
As of the end of the second quarter, overseas institutional and individual holdings of yuan-denominated financial assets totalled 4.9 trillion yuan (US$717 billion), according to ICBC International, the Hong Kong investment banking arm of Industrial and Commercial Bank of China, one the country’s big four banks. Within that total, the share of yuan-denominated stocks and bonds as a percentage of total assets held by global investors increased to about 2.5 per cent and 3.0 per cent, respectively.
Despite the trade war and the sharp depreciation of the yuan against the dollar this year, there are signs the use of the yuan on a global basis is starting to pick again.
The irony is not lost on Kay Van Petersen, global macro strategist at Saxo Capital Markets based in Singapore.
