China’s yuan finds firmer footing in corporate fundraising efforts

China’s yuan is gaining traction as a go-to fundraising currency for companies expanding overseas, bolstered by favourable conditions, including a larger central-bank quota that offers cheaper, stable funding in Hong Kong, according to market participants.

Launched in October, the scheme was expanded in December to cover more banks and their overseas entities, and to extend eligible uses from trade finance to capital expenditure and working capital. Companies can secure yuan funds from 40 participating banks at onshore interest rates, which are roughly half those in Hong Kong dollars.

The higher quota and expanded scope underscore a broader trend: both Chinese and international companies are increasingly using the yuan for loans and bonds, bolstering Beijing’s drive to internationalise the currency since the 2008 financial crisis.

“Yuan financing is expanding as clients increasingly choose it for lower costs,” said Adaline Zheng, CEO of UOB Hong Kong. “Foreign-exchange trends, interest-rate shifts and supply-chain reshaping are all driving greater offshore yuan use.”

She said more companies in China and the Association of Southeast Asian Nations (Asean) were using the yuan for cross-border trade and financing. Since 2023, UOB’s cross-border yuan payments and trade settlement flows had doubled, marking growing structural demand from clients across supply chains, key trade corridors and investment activities, she added.