According to data released by the State Administration of Foreign Exchange (SAFE) on Tuesday, in March 2024, the proportion of Chinese companies and individuals using RMB in cross-border transactions rose to 54.3%, with the corresponding amount reaching US$724.9 billion, both of which set new historical records.

It is worth noting that the dominance of the US dollar in China's cross-border settlement continues to weaken. The proportion of US dollar settlement narrowed to 41.4% in March, showing a significant decline from the peak of more than 70% in the early stages of the Trump administration taking office in 2018. With the recent increase in tariff policies and a capricious attitude, the trust of the US dollar in the global financial system has been impacted, prompting more Chinese market players to actively avoid US dollar settlement.

Market analysis shows that there are dual driving forces behind the surge in cross-border use of the RMB. In addition to trade factors, mainland investors' investment allocation to the Hong Kong stock market significantly increased in March through the Shanghai-Hong Kong Stock Connect and Shenzhen-Hong Kong Stock Connect. Zhao Yaoting, chief Asian foreign exchange and interest rate strategist at Bloomberg, pointed out that the linkage effect of Chinese stocks in domestic and foreign capital markets has become a key catalyst for the counterattack of the US dollar in recent years.

The policy level continues to send positive signals. The People's Bank of China has recently stated that it will focus on optimizing the convenience of cross-border use of the RMB, and will hold a special press conference this Wednesday to introduce the specific arrangements for promoting the facilitation of cross-border financial services in Shanghai. Wu Ruicheng, a senior economist at the French Foreign Trade Bank in Hong Kong, analyzed from a strategic perspective that in the context of the normalization of geopolitical games, the initiative of Chinese-funded enterprises to adopt local currency settlement has been increasing, and this trend may drive the cross-border use rate of RMB to continue to rise in the future.