Summary: How RMB Internationalization Could Change the USD’s Role—An Insider’s Perspective
There’s been a lot of talk lately—especially在外贸圈子里—about whether China’s push to make the RMB (renminbi, or yuan) more global will really shake up the US dollar’s dominance. This article unpacks what could actually change, based on my own experience handling cross-border transactions, interviews with trade compliance experts, and real-world data from organizations like the IMF and USTR. I’ll show you where things are getting simpler, where they get weirdly complicated, and how all this might affect your business or investments. Plus, I’ll throw in a handy table comparing how different countries verify "real" trade, so you don’t get lost in paperwork hell.
What Problem Does RMB Internationalization Solve?
If you’ve ever sent money between countries or dealt with import/export, you know the US dollar is king. Most cross-border deals—even outside the US—involve the USD. But that means:
- Exchange rate risk if you’re not USD-based
- Potential US financial sanctions reach far beyond its borders
- Extra fees and delays (I’ve literally waited days for simple settlements because dollars had to clear in New York)
China wants more of its trade, and more global reserves, to use the RMB. The hope is to make things faster, cheaper, and less vulnerable to US politics. But will it really change the game for the USD? Let’s break it down.
Step-by-Step: What Happens When You Try to Settle in RMB vs USD?
1. Opening an RMB Account Abroad
My first stab at using RMB directly was in Hong Kong. I thought it would be as simple as opening a USD account. Nope. There’s a pile of KYC (know-your-customer) docs, plus the bank asked for proof of "genuine trade" with China—actual contracts, shipping docs, sometimes even customs declarations. Compare that to opening a USD account at the same bank: just a company license and a tax ID, done in an hour.
Screenshot below: (source: HSBC HK online portal, 2023)
This is pretty typical. According to BIS Quarterly Review (2023), most offshore RMB accounts still require more documentation than USD, partly because Chinese regulators want to avoid "fake trade" and capital flight.
2. Making the Payment: Transaction Costs and Delays
With USD, you get SWIFT, and most banks have deep liquidity. Settlement is fast, sometimes same-day. With RMB, it depends: Hong Kong, Singapore, and London have decent RMB clearing banks. But try sending RMB to a supplier in, say, Brazil, and you’ll find fewer banks are willing to handle it. I’ve been stuck with longer settlement times and sometimes higher fees for less common corridors.
Practical example: A client in Germany tried to pay a Chinese supplier in RMB. The German bank routed the payment via a correspondent in London, then to China. The whole thing took three days, versus a USD payment that would clear in less than one. And the German side had to explain to their bank why they weren’t using USD—compliance flagged it as "unusual activity."
3. Trade Documentation and "Verified Trade" Standards
Here’s where things get bureaucratic fast. China’s SAFE (State Administration of Foreign Exchange) has a strict definition of "verified trade"—you need commercial invoices, customs clearance, sometimes even proof of physical delivery. In the US or EU, as long as the transaction isn’t obviously suspicious, banks aren’t nearly as picky.
| Country/Region | "Verified Trade" Legal Basis | Main Executing Agency | Typical Required Docs |
|---|---|---|---|
| China | SAFE Circular 7 (2013), PBOC regulations | SAFE, PBOC | Invoice, contract, customs declaration, shipping docs |
| US | UCC, OFAC rules (for sanctions) | OCC, Federal Reserve, OFAC | Invoice, basic contract (rarely checked) |
| EU | PSD2, national banking rules | ECB, national regulators | Invoice, sometimes contract |
| Singapore | MAS anti-money laundering rules | MAS | Invoice, sometimes bill of lading |
You can see the differences are pretty stark. China’s rules are hands-down the strictest, which slows down RMB usage offshore. For reference, SAFE Circular 7 is available here.
Case Study: When RMB Settlement Gets Tangled in Trade Verification
Let me tell you about an actual case from 2022. A Singaporean electronics importer (let’s call them "TechAsia") wanted to pay their Shenzhen supplier in RMB to hedge costs. The bank in Singapore asked for an invoice and a contract, but the Chinese bank also demanded a customs declaration showing the goods had left China. Problem: The Shenzhen supplier was using a third-party logistics company, so the customs paperwork didn’t match the invoice name.
Result? The RMB payment got delayed for two weeks while TechAsia tried to get matching documents from three different companies. If they’d paid in USD, the Singapore bank would have cleared it with just an invoice. The importer told me, "It almost wasn’t worth the hassle. We only pushed ahead because the RMB rate saved us 1.5% that month."
For more on these cross-border headaches, see the OECD’s Trade Facilitation page.
Dr. Alice Wong (International Finance Consultant, ex-WTO): "RMB internationalization is happening, but the real bottleneck is not currency swaps—it’s trust in documentation and legal standards across countries. Until China relaxes control or other countries adopt stricter verification, the USD will remain the easier option for most deals."
Data from the IMF’s COFER database (Q4 2023) backs this up: the USD still accounts for nearly 60% of global reserves, while the RMB is at about 2.5%. SWIFT data from SWIFT RMB Tracker shows RMB settlement is growing, but is still dwarfed by the USD and even the euro.
Some Unexpected Twists
I’ll admit, I once tried to wire RMB from a US bank to a supplier in Shanghai, thinking it’d be "future-proof." The US bank just bounced the request—"Sorry, we don’t support RMB remittance unless it’s via a correspondent in Hong Kong." I lost half a day fixing the mess and had to switch to USD anyway.
On the other hand, a friend in the shipping industry swears by RMB settlements for deals with Chinese ports: "You get better rates, and the Chinese side is happier to negotiate. But don’t even try if you’re dealing with an African or South American partner—they’ll just ask for dollars."
Conclusion: Will RMB Overtake the USD? Not Anytime Soon, But…
So, does RMB internationalization threaten the US dollar’s role? In my experience and according to most experts, not in the short term. The hurdles around documentation, legal standards, and global trust mean the USD is still much easier for most cross-border business. But things are changing at the margins: more trade with China is settling in RMB, especially around Asia and for energy deals (see the USTR 2023 Trade Barriers Report for US concerns).
My advice? If you trade with China, it pays to set up for RMB settlements—but be ready for paperwork. For global reserves and finance, the USD’s network and trust still win out. But if China keeps opening up, and if more central banks add RMB to their reserves, we could see a gradual shift. Watch this space, and always double-check your bank’s fine print before wiring large sums—trust me, it’s a headache you don’t want.
Next steps: If you’re considering RMB settlements, start by opening an RMB account in Hong Kong or Singapore, and get familiar with SAFE documentation. Keep an eye on new trade agreements—China’s been pushing for more RMB-denominated oil and commodity contracts, which could speed up the trend.
For further reading, check the IMF’s 2022 paper on RMB Internationalization.
Author background: I’ve spent over a decade in international trade compliance, worked with finance teams on both sides of the Pacific, and have made every mistake in the book when it comes to cross-border settlements. All opinions here are based on real transactions, with data and references from official sources.