What is the significance of using the first Chinese yuan to surpass the US dollar in cross-border transactions in China?

In March of this year, the use of the Chinese yuan in cross-border transactions surpassed the US dollar for the first time. According to the research conducted by Bloomberg Information Research Company based on the data of China's State Administration of Foreign Exchange, the proportion of RMB in China's cross-border income and expenditure rose from nearly zero in 2010 to a record 48% at the end of March this year, while the proportion of the U.S. dollar in the same period fell from 83% to 47%. 48% versus 47%. It took 13 years for the RMB to surpass the US dollar in China's cross-border transactions. Although there may be some setbacks, this is undoubtedly a milestone in the process of Internationalization of the renminbi internationalization.
The increase in the use of RMB in China's cross-border transactions is the result of China's expansion of opening up. In particular, the Open platform represented by the "the Belt and Road" initiative has promoted the internationalization of Internationalization of the renminbi, the scale of China's foreign trade has continued to expand, and overseas demand for RMB use has increased. On the other hand, this is also a natural result of the gradual opening of China's capital account and the development of the offshore RMB financial system. In addition, under the wave of "de dollarization", other countries have gradually become one of the safe haven currencies replacing the US dollar in order to diversify risks.
The author believes that the use of RMB in cross-border transactions in China surpasses the US dollar in many ways, which has a positive impact. First, it is conducive to further promoting the process of Internationalization of the renminbi internationalization. The increase in the use of RMB in cross-border transactions in China is conducive to promoting the return of RMB to the domestic market, smoothing the circulation between the onshore and offshore markets of RMB, increasing the confidence of overseas partners in using RMB for transactions, and further creating a new type of mutually beneficial cooperation relationship based on the free exchange of RMB. Secondly, it is beneficial for reducing the exchange costs of Chinese enterprises. After enterprises use RMB cross-border, they do not need to handle the settlement and sale of foreign exchange and related derivatives transactions to hedge Foreign exchange risk, which can greatly save financial costs. Thirdly, it is conducive to reducing the operational risks faced by domestic and foreign enterprises in cross-border transactions, such as exchange rate fluctuations and currency mismatches. Since the emergence of the financial crisis in 2008, exchange rate fluctuations in various countries have been more significant. Coupled with the impact of geopolitical factors such as the Ukraine crisis, cross-border transactions in various countries around the world have become more unstable and uncertain. The increase in the use of RMB in cross-border transactions in China is conducive to promoting international currency diversification, reducing business risks, and improving the stability and certainty of cross-border transactions. Fourthly, it is conducive to improving China's international status. The status of a country's currency to some extent reflects its international status. With the official inclusion of RMB in the International Monetary Fund (IMF) Special Drawing Rights (SDR) currency basket in 2016, RMB has gained increasing recognition internationally. The use of RMB in this cross-border transaction exceeded the US dollar, which reflects the further improvement of the international status, and also reflects the confidence of the international community in China's economic development and Internationalization of the renminbi.
In recent years, the Internationalization of the renminbi index has shown an overall upward trend. For example, the Chinese yuan surpassed the US dollar for the first time in February this year, becoming the largest monthly trading volume currency on the Moscow Stock Exchange; The RMB has been included in the currency basket by the Central Bank of Belarus; The People's Bank of China and the Central Bank of Central Bank of Brazil signed a memorandum of cooperation on the establishment of RMB clearing arrangements in Brazil; RMB settlement for the first time used for imported liquefied natural gas delivery