Despite its gains in global trade, the yuan will not replace the US dollar in global reserves any time soon, Standard Chartered China’s CEO Jean Lu made the argument on Wednesday despite Beijing’s attempts to encourage greater use of the Chinese currency.
“At least in my career, there is no way for the RMB to challenge the USD,” she said during a media roundtable in Singapore.
But if the yuan isn’t quite ready to take the top spot yetLu suggested that other second-tier currencies may face competition from the yuan. “Compared to the yen or pound, the RMB could have a chance,” she said.
Beijing is working to make the yuan more relevant in global finance. The latest Five-year planThe document, released in March, details the Chinese government’s desire to expand the currency’s role in international markets through mechanisms such as so-called panda and dim sum bonds – RMB-denominated debt issued in mainland China and offshore markets, respectively.
Investors reconsider the importance of the US dollar as the country’s national debt rises; Governments are also concerned that Washington is using the dollar to impose sanctions on countries and companies. This has led to a shift towards alternative currencies such as the Swiss franc or the euro, or other assets such as gold.
Nevertheless, the US dollar accounted for 57% of global foreign exchange reserves in the first quarter of 2026 International Monetary Fund (IMF). (This was a one percentage point increase from the previous quarter, largely due to the slight appreciation of the U.S. dollar against other currencies.) In contrast, the yuan accounted for just 2% of reserves, down from 1.95% in the previous quarter.
Lu blamed “limited liquidity in offshore markets” for the yuan’s difficulty gaining traction overseas. Chinese capital controls make it difficult for the yuan to flow freely on global markets. “We are talking about less than 2 trillion yuan, with almost half of it in Hong Kong,” she said.
The people Bank of Chinathe country’s central bank, is leading China’s push to internationalize the renminbi: This year it has hired major institutions such as Deutsche Bank as an offshore clearing bank to optimize European access to the RMBand introduced new repo facilities to allow foreign central banks to secure yuan liquidity.
The use of the yuan is growing rapidly in Southeast Asia, one of China’s most important trading partners. According to a, the settlement volume between China and Southeast Asia rose to 8.9 trillion yuan ($1.3 trillion) in 2025, an increase of 50.7% March report from Standard Chartered.
ASEAN firms are also increasingly viewing RMB capital markets as reliable tools for hedging and raising funds. For example in June Singapore Airlines made its debut in the offshore yuan market with the issuance of a 1.5 billion yuan dim sum bond.
The geopolitical conflict also strengthens the reputation of the yuan. US sanctions against Russia imposed after the invasion of Ukraine prompted Moscow’s trading partners such as China and India to adopt the yuan as an alternative trading currency. Following U.S. attacks on Iran earlier this year, Tehran also ordered boatmen attempting to cross the Strait of Hormuz Pay tolls in yuan.
Trade between Southeast Asia and China is reaching historic highs, driven by new infrastructure projects like this Pinglu Channelwhich connects southwest China with the Gulf of Beibu, reducing logistics costs by up to 30%.
“Southeast Asia is not far from China and has similar languages, culture and heritage,” said Patrick Lee, ASEAN and Singapore CEO of Standard Chartered, at the Sept. 29 media roundtable. “Given the supply chain shifts and geopolitical changes we are seeing, Chinese companies see ASEAN as an attractive location [invest and] Building supply chain ecosystems.”
But Southeast Asian manufacturers are currently struggling with Chinese overcapacity. Thailand recorded over 2,000 factory closures in 2024 due to an influx of cheap Chinese steel and other goods, while Indonesian textile manufacturers struggled to remain competitive, it said Shay Wester of the Asia Society Policy Institute.
However, Lee and Lu believe that China is not only focused on selling but also manufacturing goods in Southeast Asia.
“China is bigger [state-owned enterprises] And [privately-owned enterprises] “They definitely come to Southeast Asia to put down roots and invest for the long term,” Lee said. “It is also a bet that ASEAN economies will continue to educate and improve their businesses and systems.”
Lu also dismissed claims that China is easy Export of its industrial excess capacity. “With the threat of a possible tariff and trade war, everyone is urging China to come into their markets to produce and help them build their own industries and train their workforce… this is a golden opportunity for both China and ASEAN.”