ECONOMYNEXT – Chinese Ambassador to Sri Lanka Qi Zhenhong has reaffirmed China’s readiness to work closely with Sri Lanka to diversify reserves, reduce exchange-rate risks, and promote mutually beneficial financial cooperation, the island nation’s main business chamber said.
China has been pursuing the internationalization of the renminbi (RMB, also called the Chinese yuan or CNY) since the late 2000s as a deliberate long-term strategy to reduce its dependence on the US dollar, enhance global trade efficiency for Chinese firms, and elevate Beijing’s financial influence.
Key milestones of RMB internationalization include the launch of offshore RMB clearing centers, starting with Hong Kong in 2009 and now numbering more than 25 worldwide, and the inclusion of the RMB in the IMF’s Special Drawing Rights (SDR) basket in October 2016 with a 10.92% weighting.
The move has seen a rapid expansion of cross-border RMB settlement reaching ¥46.7 trillion or roughly USD 6.5 trillion in 2024, and the development of the Cross-Border Interbank Payment System (CIPS), which by November 2025 handled over 5% of global payments (up from less than 1% in 2015).
Chinese Ambassador to Sri Lanka Zhenhong revealed that the world’s second biggest economy’s willingness to support Sri Lanka in a forum recently held on Chinese Yuan (RMB) Internationalization Forum 2025, organized by the Sri Lanka–China Business Council of the Ceylon Chamber of Commerce (CCC) in collaboration with the Bank of China.
“Addressing the gathering, Ambassador Qi Zhenhong noted that while the US dollar continues to dominate global finance, it also exposes developing economies to volatility and systemic risks,” the CCC said in a statement.
“He emphasized the importance of establishing a more equitable, stable, and inclusive monetary system and explained that RMB internationalization is a market-driven, enterprise-led, and risk-controllable process designed to enhance global financial stability.”
“The Ambassador also highlighted that over 80 central banks have already incorporated RMB into their reserves, with cross-border RMB settlements surpassing 35 trillion yuan in the first half of 2025,” which he referred as a “clear evidence of the currency’s growing influence”.
The discussions centered on promoting RMB settlements in trade, investment, and financial transactions between the two nations, furthering economic stability and efficiency.
Deputy Finance Minister Anil Jayantha Fernando observed that wider use of RMB in transactions could reduce costs, increase administrative efficiency, and attract sustainable foreign direct investment.
“He further mentioned that discussions with key Chinese enterprises, including Sinopec, are progressing positively and signaled that significant new investments are on the horizon,” CCC said in the statement.
Fernando added that the upcoming Investor Protection Act will ensure a stable and transparent environment for investors.
“He noted that these efforts, alongside digitalization and RMB settlement mechanisms, are aligned with Sri Lanka’s broader economic reform agenda.”
Beijing has aggressively signed bilateral local-currency swap lines with more than 40 central banks totalling over ¥4 trillion, promoted RMB-denominated oil and commodity contracts on the Shanghai International Energy Exchange, and encouraged BRICS and Belt-and-Road partner countries to invoice trade and hold reserves in RMB.
As of mid-2025, the renminbi accounts for approximately 4.7% of global foreign-exchange reserves (up from 1% a decade ago) and roughly 3.6% of international payments via SWIFT, making it the fourth-most-active currency for global payments.
For the United States, this gradual rise triggers multiple strategic concerns, including a possibility of widely accepted RMB eroding the dollar’s exorbitant privilege, potentially limiting Washington’s leverage over countries such as Russia, Iran, or even allies seeking to circumvent US secondary sanctions.
Analysts say greater use of CIPS and RMB clearing networks creates parallel financial infrastructure that is largely immune to US regulatory reach, raising fears of a fragmented global payments system.
A stronger RMB challenges the petrodollar system as Saudi Arabia, Brazil, and India increasingly settle oil and commodity trades in yuan.
The Chinese move has led US policymakers to worry that deeper RMB internationalization will give Beijing more influence over global interest-rate and exchange-rate dynamics and could accelerate de-dollarization among emerging markets, especially if China fully liberalizes its capital account or significantly relaxes currency controls. (Colombo/November 17/2025)
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