AsianFin -- China’s central bank, the People’s Bank of China (PBOC), announced on Monday that it is urging state-owned enterprises to prioritize the use of the yuan in payment and settlement processes as part of their overseas expansion efforts. This move is viewed as an official push to accelerate the internationalization of the yuan amidst rising global trade tensions.

The announcement comes at a time of heightened uncertainty in global markets. U.S. President Donald Trump has implemented so-called "reciprocal" tariffs, disrupting global trade and stirring volatility in financial markets. While Trump temporarily paused planned tariff hikes for most countries, he raised duties on Chinese goods to 145%, prompting Beijing to retaliate with countermeasures.

In its notice, the PBOC revealed plans to encourage commercial banks in Shanghai to expand cross-border credit, aiming to reduce companies’ yuan financing costs and promote yuan-denominated imports and exports. The central bank also stated it would enhance the development of the Cross-Border Interbank Payment System (CIPS) and explore the application of blockchain technology. These efforts are designed to provide safe and efficient settlement and clearing services for global trades, shipping, investments, and financing conducted in yuan.

The PBOC’s initiative underscores China’s strategic goal of boosting the yuan’s global role as a currency for international transactions, particularly in light of ongoing trade frictions and the increasing need for alternative financial systems.