China Net Financial Accounts Will Increase, Galaxy Securities Says

China Galaxy Securities' research report stated that since 2022, global geopolitical conflicts have intensified, and financial sanctions have become tools. The huge impact on the financial market and economic operation has led to a significant increase in the international community's demand for currency diversification, and the internationalisation of the RMB has ushered in new opportunities.

At present, commodity pricing, bilateral trade settlement in local currency, and new cross-border payment systems (such as multilateral central bank digital currency bridges) may be the focus of development. The degree of RMB internationalisation can be analysed from the three indicators of cross-border revenue and expenditure function, reserve function and investment and financing function. At present, the proportion of RMB in global trade settlement, reserves, investment and financing is still limited, but the growth rate is obvious.

According to SWIFT data, the RMB’s share of global payments rose from 0.1% in 2009 to 2.42% in 2021. The 2022 RMB Internationalisation Report shows that the total amount of RMB cross-border receipts and payments in 2021 was 36.61 trillion yuan, a year-on-year increase of 29.0%. According to IMF data, in 2022, global central banks held a total of $11 trillion in foreign exchange reserves, of which RMB was $298.435 billion, accounting for 2.49%, which is 1.60 percentage points higher than when it first joined the SDR in 2016, ranking fifth among major currencies.

By the end of 2022, Chinese bonds have been included in the three major international bond indexes. In terms of financing, foreign issuers have issued a total of 630 billion yuan of panda bonds in China's bond market. In terms of direct investment, China's foreign investment increased by 51% from 2012 to 2022, while the RMB cross-border settlement volume of foreign direct investment grew by 4151%. In 2022, China's foreign non-financial direct investment reached $116.85 billion, of which the RMB settlement part was 123.95 billion yuan, accounting for about 15.6% of the total investment.