Beijing’s Latest Push to Globalize the Yuan Meets the Same Roadblocks, Analysts Say

Beijing has unveiled its most sweeping bid yet to elevate the yuan’s global standing—promising foreign traders direct access to its flagship futures exchange—while courting South African investors to use the currency.

Analysts, however, say the campaign still hits the same immovable walls: tight capital controls, a shallow bond market, and an exchange rate Beijing refuses to set free. They add that a debt-driven tech spree that spurs money-printing, and an export-driven growth model that traps liquidity at home, further hobble the yuan.

Without sweeping fixes on all those fronts, they argue, even headline-grabbing reforms will leave China’s currency stuck on the sidelines of world finance.

On May 27, the Shanghai Futures Exchange (ShFE) released draft rules that, for the first time, would allow overseas investors and brokers to directly trade 18 of its domestic commodity futures and options—including copper, nickel, and alumina—without going through Chinese intermediaries.

The 34 proposed changes, open for public comment until June 4, would allow participants to post margins in foreign currencies. The ShFE presents the move as a way to price the raw materials China consumes in renminbi (RMB), or Chinese yuan, rather than relying on dollar-based benchmarks set in London and New York. (While the terms can be used interchangeably, renminbi technically refers to the currency name, while the yuan technically refers to the main currency unit.)

This rules shift aims to strengthen China’s influence over global commodity pricing, reflecting its status as the world’s largest consumer of many raw materials.

That same day, in Johannesburg, South Africa, the Bank of China co-hosted a high-level seminar on China–South Africa bond-market connectivity. Officials pitched the yuan as an alternative settlement and funding currency, saying wider use could deepen financial ties, give African partners more Belt and Road financing options, and expand the yuan’s international role.

Strict capital controls, he noted, prevent the yuan from moving across borders as freely as the U.S. dollar, British pound, or Japanese yen.

If Beijing allowed full convertibility, Wu said, Chinese savers would rush to swap yuan for hard currencies, triggering the capital flight that officials fear most.

Foreign holders of yuan also lack safe places to park it, he added.

“If you hold dollars, you can buy U.S. Treasurys—safe, reliable investments. China doesn’t have an equivalent, well-developed market with a trusted credit-rating system,” he said.

He said international credit-ratings agency Moody’s underscored that point on May 26 by reaffirming its negative outlook on Chinese government bonds, citing ongoing tensions with major trading partners.

Wu argues that scrapping capital controls and building a deep, transparent bond market are non-negotiable steps toward currency internationalization.

As U.S.–China trade tensions rose, Beijing borrowed heavily to fund high-tech projects aimed at bypassing U.S. export controls, Wang told The Epoch Times.

Because the returns are slow or uncertain, the government has fallen into what he calls a “technology-debt trap.”

The impact appears on three fronts, Wang said.

First, swelling debt forces the People’s Bank of China to print more money. Second, Beijing keeps interest rates artificially low to ease repayment, widening the U.S.–China rate gap and weakening the yuan. Third, cheap funding channels capital into favored tech ventures at the expense of other industries, worsening economic imbalances and further pressuring the currency.

“A country that runs persistent trade surpluses cannot export its currency the way a deficit country can,” he told The Epoch Times.

Deficit nations, like the United States, send large sums of their currency abroad because foreigners receive dollars in exchange for goods and services and then reuse them for trade, investment, and reserves. For China, it is the reverse, he said.

Fan called the ShFE’s headline-grabbing measures on May 27 “trivial” compared with what is needed.

Chinese leader Xi Jinping visited Vietnam on April 14–15 to strengthen economic ties amid rising U.S. tariffs.

“When real money is at stake,” Fan said, “people weigh costs and vote with their feet.”

Beijing’s flagship industrial policy, Made in China 2025, launched with much fanfare in 2015 in a bid to upgrade the manufacturing sector, move up the value chain, and build self-sufficiency in high-tech industries to lessen dependence on foreign technology, but Fan sees no meaningful change nearly a decade later.

“China remains a supply-side, manufacturing-centric economy with neither the will nor the ability to become consumer-driven,” he said. “Even if Beijing wanted such a transformation, it couldn’t pull it off.”

That export-driven, factory-first model, he argues, forces Beijing to maintain capital controls and shallow financial markets—precisely the barriers that stop the yuan from going global.

For now, analysts agree, the yuan’s global march is stuck at the starting line—no matter the fanfare in futures markets or on far-flung bond-seminar stages.