2023-06-18 14:16:11
A new chapter in the global economic history of the dollar against the yuan unfolds this Monday, when several shares of Chinese companies, including those of the giants Alibaba and Tencent, will be available in yuan on the stock market of Hong Kong. These shares will be listed and traded simultaneously in yuan and Hong Kong dollars. This measure, intended initially for foreign investors holding yuan, should later be open to investors from mainland China via the Hong Kong-China Stock Connect link.
The issuance of these shares in yuan is a strong sign of China’s desire to promote the internationalization of its currency. According Ding Wenjie of China Asset Management, this initiative could eventually be extended to other types of securities, such as debt securities or even alternative assets. However, initial interest in these yuan-listed stocks may be modest due to potential risks, such as the depreciation of the Chinese currency and a slowing economy.
China’s efforts to strengthen the yuan’s place on the world stage have already begun to bear fruit. In effect, Pakistan recently made its first payment for importing Russian crude in yuanwhich marks a significant step forward in the international adoption of the Chinese currency.
However, the yuan lags far behind the US dollar, which still largely dominates international payments. Despite slight growth over the past two years, the yuan’s share is only 2.29%. Nevertheless, China’s initiative marks a significant step towards establishing the yuan as a real alternative to the US dollar on the international stage.
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