Jointly organized by Renmin University of China (RUC) and Bank of Communications, the 'Cross-border RMB Observation' questionnaire results presentation and exchange conference took place on the morning of May 27, 2024. Hosted by the International Monetary Institute (IMI) and the Chongyang Institute for Financial Studies at RUC, the conference aimed to showcase the findings of the 'Cross-border RMB Observation' questionnaire, discuss the current status and prospects of cross-border RMB usage, and provide a platform for scholars, experts, financial institutions, and enterprises to exchange ideas and foster cooperation.

Zhao Xijun, Co-Dean of the China Capital Market Research Institute at RUC, and Tang Jianwei, Deputy Managing Director of the Development Research Department at Bank of Communications, delivered welcoming remarks. The conference was chaired by He Qing, Executive Associate Dean of the National Academy of Financial Research and Professor of the School of Finance at RUC.

(He Qing, Executive Associate Dean of the National Academy of Financial Research and professor of the School of Finance at RUC)

Zhao Xijun emphasized the orderly advancement of RMB internationalization as outlined in the Report to the 20th National Congress of CPC, aiming to narrow the gap between its international currency status and economic role. RUC has long been committed to serving national development, annually releasing the 'RMB Internationalization Report,' which has become a leading window for academic and practical attention. Adapting to new circumstances, the IMI at RUC and Bank of Communications jointly launched the quarterly 'Cross-border RMB Observation' report, reflecting cross-border RMB usage through questionnaire to provide information support to financial institutions, enterprises, and policy sectors. Promoting RMB internationalization through economic and trade cooperation and high-quality development to aid in achieving Chinese modernization remains a significant and current topic of concern.

(Zhao Xijun, Co-Dean of the China Capital Market Research Institute at RUC)

Tang Jianwei of Bank of Communications highlighted recent trends in China's import-export trade and overseas corporate activities, suggesting new opportunities for RMB internationalization through these trends. Bank of Communications has been distinctive in its international and comprehensive efforts and will prioritize supporting RMB internationalization as a key task in the “14th Five-Year Plan”. The first-quarter report provided a micro-analysis perspective through a survey of over 1,600 enterprises, characterized by practicality, diversity, and broadness.

(Tang Jianwei, Deputy Managing Director of the Development Research Department at Bank of Communications)

Tu Yonghong, Deputy Director of IMI and Dean of the Yangtze River Economic Zone Research Institution of RUC, introduced that the IMI of RUC and Bank of Communications jointly initiated the compilation of the 'Cross-Border RMB Observation' quarterly report, and the first quarter report of 2024 has been officially released.

This round of surveys found several notable highlights in cross-border RMB usage:

1. The continuous advancement of RMB internationalization has a solid foundation. As a major economy in the East Asian region, China has a natural advantage in the circulation and use of RMB within the region.

2. Enterprises' initiative in using cross-border RMB for settlement has increased, with over 70% of enterprises using RMB for cross-border trade settlement. Enterprises are not only using RMB for transactions but also seeking more comprehensive financial service solutions related to RMB.

3. The application scenarios of RMB internationalization are becoming more diverse. From the perspective of usage scenarios, enterprises widely use RMB not only in daily cross-border trade settlements (72.98%) and foreign exchange transactions (57.13%) but also in other financial activities.

4. The motivations for using cross-border RMB are healthier, covering asset safety, risk allocation, cash management, and significant returns.

However, the report also pointed out several shortcomings in cross-border RMB business that need to be addressed:

1. The participation rate in specific businesses is low, such as only 19.18% of enterprises engaged in RMB trade financing and 16.18% used cross-border RMB cash management. The application rates of various offshore RMB-related businesses are also generally low.

2. Policies are too complex, with poor consistency and compatibility. The laws and regulations involving cross-border RMB usage may contain numerous clauses and details, which can vary across different economic fields and transaction types, making it difficult for enterprises to fully understand and grasp.

3. The acceptance of RMB by counterparties is relatively low, indicating that the acceptance of RMB in the international market needs to be improved. This also reflects concerns about RMB exchange rate fluctuations, uncertainties about RMB-related policies, limited usage scenarios of RMB abroad, and unfamiliarity with RMB-related business processes.

4. There are obstacles to capital flow and difficulties in risk hedging. About 45.78% of enterprises consider capital flow obstacles as one of the main problems faced by cross-border RMB settlement, and 20.07% of enterprises report insufficient risk hedging derivatives. Approximately 30% of enterprises regard the exchange rate fluctuation of RMB as the main risk in using RMB for cross-border settlement and cross-border direct investment.

5. The coverage and depth of the financial service network are insufficient. While domestic financial institutions have played an important role in promoting RMB internationalization, they have not attracted enough international financial institutions to participate in the market for providing RMB financial services.

The 'Cross-Border RMB Observation' report emphasizes that for enterprises, using RMB for cross-border settlement is a fundamental way to reduce asset risk, exchange rate risk, and costs. It requires joint efforts from the government, financial institutions, and enterprises to achieve greater results by solidly advancing the following tasks.

Government Level:

1. Optimize cross-border RMB business policies and promote trade and investment facilitation.

2. Improve laws and regulations, strengthen policy interpretation, and provide a clear and stable legal environment for enterprises.

3. Promote two-way opening of the financial market, enhance international cooperation, provide more overseas investment opportunities for domestic investors, and expand the scenarios and scope of cross-border RMB usage.

4. Enhance the financing currency function of RMB, encourage financial institutions to actively carry out RMB cross-border trade financing and overseas loan business, support foreign central banks, international development institutions, multinational corporate groups, etc., to issue Panda bonds in China, and support policy financial institutions to issue RMB-denominated securities abroad.

5. Create a good ecosystem for the international use of RMB, ensuring that the internationalization process of RMB advances steadily in a safe and stable environment.

6. Support new forms of foreign trade in cross-border RMB settlement and improve financial service levels.

7. Optimize financial market infrastructure, promote digital RMB, and improve the cross-border payment system.

Financial Institutions Level:

1. Innovate financial products to solve the pain points and blockages in cross-border trade settlement and improve financial service levels.

2. Strengthen cross-border cooperation, expand the participant scope of the CIPS, making it a more widely recognized main channel for RMB cross-border payment and clearing, and enhance the efficiency and security of RMB clearing.

Enterprises Level:

1. Improve exchange rate risk management capabilities, strengthen risk management training, use financial tools such as options and futures to lock in exchange rates, and reduce the impact of future exchange rate fluctuations.

2. Actively utilize policies that facilitate cross-border RMB business, such as tax incentives and settlement facilitation, to increase the usage scenarios of RMB in trade with countries along the 'Belt and Road' initiative.

(Tu Yonghong, Deputy Director of IMI and Dean of the Yangtze River Economic Zone Research Institution of RUC)

In the expert discussion session, Li Jianjun, Vice Principle of the Central University of Finance and Economics; Liu Jiefeng, Division Director of the Comprehensive Division of the Department of Finance of the Ministry of Commerce; E Zhihuan, Associate Dean of the Research Institute of the Bank of China; Zhang Jie, Vice Chairman of the China Chamber of Commerce for Import and Export of Light Industrial Products and Arts-Crafts; Qu Fengjie, Research Fellow of the Foreign Economic Research Institute of the National Development and Reform Commission; Ma Fangfang, Deputy Dean of the School of International Relations of Beijing Language and Culture University; Cui Ying, Senior Economist of the Research Institute of the People's Bank of China; and Xu Da, International Business Expert of the International Department/Offshore Financial Center of Bank of Communications, shared their views on the current status and prospects of RMB cross-border usage and the content and significance of the 'Cross-Border RMB Observation' report. Lu Liping, Associate Professor of the School of Finance of RUC, chaired the discussion. The in-depth discussion among experts provided new wisdom and inspiration for RMB internationalization, with valuable insights and opinions expressed by the guests.

Li Jianjun pointed out that in recent years, cross-border RMB business has developed rapidly. In an international monetary system still dominated by the US dollar, the international functions of the RMB are increasingly evident. Geopolitical conflicts, global supply chain restructuring, and policy uncertainties have profoundly affected the cross-border usage of RMB. Although the volume of RMB transactions abroad is large, it is mainly concentrated in Hong Kong and Singapore, focusing on trade, while the proportion of investment and financing remains small. The 'Cross-Border RMB Observation Report' should continue to advance, with future questionnaire designs more oriented towards the perspectives of enterprises and counterparties, and more targeted policy suggestions, studying digital RMB and the “Belt and Road” project.

(Li Jianjun, Vice Principle of the Central University of Finance and Economics)

Liu Jiefeng pointed out that the development of foreign trade and the internationalization of the RMB are complementary to each other. China is continuously optimizing foreign exchange management and cross-border RMB policies, laying a foundation for enhancing the international currency function of the RMB. Although the scale of cross-border RMB usage has expanded, further improvements are needed to meet actual demand. In the future, relevant departments will continue to optimize the policy environment, financial institutions will innovate cross-border RMB products, and facilitate enterprises' cross-border transactions to achieve quality and efficiency improvements in financial services for the real economy.

(Liu Jiefeng, Division Director of the Comprehensive Division of the Department of Finance of the Ministry of Commerce)

E Zhihuan stated that the 'Cross-Border RMB Observation' report has two features: it includes quarterly reports to more clearly grasp the progress of RMB internationalization, and it provides micro-level observations within the existing policy-to-market analysis framework. This approach is closer to reality and helps to promote RMB internationalization from the bottom up. She believes that a strong currency needs to enhance domestic financial functions and the international monetary role of the RMB. She suggested that the report include practical cases to demonstrate the application of RMB internationalization.

(E Zhihuan, Associate Dean of the Research Institute of the Bank of China Deputy Director of the Research Institute of the Bank of China)

Zhang Jie believed that the 'Cross-Border RMB Observation' report has analyzed the situation of cross-border RMB settlement from an international perspective with a high level of professionalism and forward-looking insights, which is of positive significance for foreign trade development. The light industry actively participated in the compilation of the report, and the survey shows that enterprises have a strong demand for cross-border RMB settlement. Especially under the current complex international situation, cross-border RMB settlement is particularly important for the high-quality development of foreign trade. It is hoped that the government, think tanks, industries, and enterprises will work together to further promote cross-border RMB settlement and make further contributions to the development of foreign trade and the light industry.

(Zhang Jie, Vice Chairman of the China Chamber of Commerce for Import and Export of Light Industrial Products and Arts-Crafts)

Qu Fengjie thought that micro-level observations are crucial for the internationalization of the RMB, as they help identify constraining factors and provide references for macro-level decision-making. Amid external challenges, China-US trade friction poses challenges to the internationalization of the RMB, necessitating attention to export pressures and technological gaps. Achieving RMB internationalization requires a genuinely open economic system and structural reforms to enhance an outward-oriented economy and the system of reform and opening up.

(Qu Fengjie, Research Fellow of the Foreign Economic Research Institute of the National Development and Reform Commission)

Ma Fangfang stated that the importance of RMB internationalization cannot be ignored, as promoting RMB internationalization is a crucial step in enhancing China's international financial discourse power. To this end, she proposed three international communication strategies: organizational communication, media communication, and interpersonal communication. With the refinement of country-specific and regional studies, it will be possible to observe and promote RMB internationalization more accurately. Researchers should be able to combine theoretical research and practice to provide concrete solutions to advance RMB internationalization and address challenges encountered in the promotion process.

(Ma Fangfang, Deputy Dean of the School of International Relations of Beijing Language and Culture University)

Cui Ying noted that reviewing the development process of RMB internationalization reveals that it has been market-driven. Policymaking bodies have focused on serving the real economy, establishing and improving a policy framework for cross-border RMB business, facilitating trade and investment, opening domestic financial markets, developing overseas RMB markets, building financial infrastructure, and fostering international cooperation. Promoting RMB internationalization prudently requires respecting market forces and being problem-oriented. The 'Cross-Border RMB Observation' report, primarily based on enterprise surveys, objectively presents market demand. Future reports could delve deeper and provide specific recommendations, serving as valuable references for policymakers.

(Cui Ying, Senior Economist of the Research Institute of the People's Bank of China)

Xu Da pointed out that the survey result in the report showing that 'nearly 70% of enterprises choose RMB settlement for asset safety considerations' was very enlightening. Bank of Communications can offer the most comprehensive non-resident account system in the market, including NRA, FTN, EFN, OSA, and innovative offshore RMB accounts, which can serve as a crucial risk management platform for enterprises' cross-border financial activities. The report indicates that enterprises still have strong demands for cross-border RMB policies. Although there are currently no RMB foreign exchange futures products in the domestic market, similar products have been launched in major global financial markets and could serve as references for future policy directions. This report reflects actual market needs and provides significant practical references for commercial banks and policymakers.

(Xu Da, International Business Expert of the International Department/Offshore Financial Center of Bank of Communications)

The presentation and exchange conference of the 'Cross-Border RMB Observation' survey results brought together experts and scholars from academia, financial institutions, and enterprises to deeply discuss RMB internationalization issues. There were heated discussions and exchanges on the importance of cross-border RMB usage, the necessity of policy support, and future development directions. The 'Cross-Border RMB Observation' report and this exchange conference have provided new ideas and directions for promoting RMB internationalization, which will have a profound and positive impact on policy formulation and practical operations in relevant fields.