A recent survey of 300 corporate clients by Standard Chartered indicates growing global business exposure to the Chinese yuan. The report found companies are increasing their yuan holdings through revenue, supply chain, and procurement activities, rather than through debt. This creates a structural underutilization of yuan financing, with nearly a quarter of firms expecting to increase onshore and offshore borrowing in the next three years. Despite this shift, the yuan remains a minor global payment currency compared to the U.S. dollar.
Several businesses in the global market are increasingly considering borrowing in the Chinese yuan. A Standard Chartered survey among its 300 corporate clients concluded that businesses are now having bigger exposure to the Chinese currency. This exposure comes through revenue streams, supply chain, and procurement rather than through debt.
The development indicates the currency is underutilized as a financing tool, and businesses are opening up towards it. Debt exposure is currently limited mostly to the U.S. dollar, leading to corporate concerns about overexposure. Nearly a quarter of companies with existing yuan exposure expect to increase their holdings. Overall, 31% of firms said financing will increase or remain steady within the next three years.
“Across sectors, yuan revenue exposure through sales, procurement, and supply-chain activity exceeds RMB debt exposure,” Standard Chartered stated in its report. The bank’s report further read, “This imbalance points to a structural underutilization of RMB financing.” The corporate shift highlights dynamic changes occurring in global forex markets.
However, the yuan’s presence in the global sector remains at a nascent stage. Financing in the local currency is slowly catching up with the rest of the world. Data from the payment messaging service SWIFT shows the yuan accounts for approximately 3% of all global payments. This contrasts sharply with the U.S. dollar, which constitutes about 50% of global settlements.
