Yuan Adoption Tracker Update: Q1 2025

CEE Staff
Apr 7
7 min read

Tracking Renminbi Internationalization Amid Global Trade Realignment

Executive Summary

The first quarter of 2025 was defined by a major leap forward in the development of China's alternative financial infrastructure, marking one of the most significant periods for the renminbi's (RMB) internationalization in recent years. The official launch of a dedicated cross-border settlement system for the digital yuan (e-CNY) represented a landmark achievement, creating a new, technologically advanced channel for international transactions that operates independently of the legacy, dollar-dominated payment rails. This was complemented by steady growth in the yuan's use in trade settlement and its share of the global foreign exchange market.

This quarterly update analyzes the key developments from Q1 2025, focusing on the strategic importance of the new digital currency infrastructure and its potential to reshape the global financial landscape. The report examines the underlying data and geopolitical context to provide a comprehensive assessment of the RMB's progress during this pivotal quarter.

Quick Takes:

Digital Yuan Cross-Border System Launched: In a watershed moment on March 17, 2025, the People's Bank of China (PBOC) announced the full integration of its digital RMB cross-border settlement system. The new infrastructure connects China with ten ASEAN nations and six Middle Eastern countries, creating a powerful new network for international trade and finance that bypasses the traditional correspondent banking system.
Trade Settlement in Yuan Surpasses 50%: In March 2025, the yuan reached a critical milestone, with 54.3% of China's own cross-border trade being settled in its own currency. This indicates that a majority of Chinese firms are now conducting their international business in RMB, reducing transaction costs and foreign exchange risks.
Yuan's Share of Global FX Trading Grows: The yuan's share of global foreign exchange trading volume increased to 8.5% in 2025, up from 7% in 2022, according to the Bank for International Settlements. The yuan solidified its position as the world's fifth-most traded currency, demonstrating its growing importance in global financial markets.
mBridge Platform Matures: The mBridge multi-CBDC platform, which includes China, Hong Kong, Thailand, the UAE, and new member Saudi Arabia, reached its Minimum Viable Product (MVP) stage. This development, combined with the digital yuan's own cross-border system, signals a multi-pronged strategy to build a robust alternative payment architecture.
Strong Economic Backdrop: The yuan's internationalization efforts were supported by a strong domestic economy, with China's GDP growing by 5.4% year-on-year in the first quarter of 2025, providing a solid foundation for increasing global confidence in the currency.

The first quarter of 2025 may be remembered as the moment when the architectural plans for a yuan-centric financial system began to transform into a functional reality. The launch of the digital yuan's cross-border network, in particular, is a long-term strategic move that could fundamentally alter the dynamics of international payments. While the yuan still has a long way to go to challenge the dollar's dominance, the developments of this quarter have significantly advanced its position and laid a robust foundation for future growth.

A New Financial Artery: The Digital Yuan Cross-Border System

The most consequential development of the first quarter was the launch of the digital RMB cross-border settlement system on March 17, 2025 [1]. This move by the People's Bank of China (PBOC) marks a pivotal step in creating a technologically advanced, state-backed payment architecture that operates independently of the US-dollar-denominated global financial system.

The new system directly connects China with a strategic bloc of 16 nations, comprising ten members of the Association of Southeast Asian Nations (ASEAN) and six nations in the Middle East [2]. While the specific countries have not all been officially enumerated, the inclusion of key trading partners in these resource-rich regions is a clear strategic choice. This network enables direct, peer-to-peer transactions in digital yuan, drastically reducing settlement times and costs.

The digital RMB can settle transactions in mere seconds, compared to the 3-5 day delay of traditional cross-border payments. This “lightning payment” capability has already been demonstrated in a test between Hong Kong and Abu Dhabi, where a company paid a Middle Eastern supplier in digital RMB, reducing handling fees by 98% [2].

This infrastructure is not merely a payment channel; it is a core component of China's broader "Digital Silk Road" strategy, integrating with other state-led technologies like the Beidou navigation system and quantum communication to enhance trade efficiency [2]. The system's underlying blockchain technology, which features automated anti-money laundering (AML) controls, has already attracted the participation of 23 central banks in its testing phase, indicating broad international interest in the technology [2].

Parallel to this development, the mBridge platform—a separate, collaborative multi-CBDC project—has continued to mature. With the central banks of China, Hong Kong, Thailand, the UAE, and new member Saudi Arabia on board, mBridge reached its Minimum Viable Product (MVP) stage in late 2024, setting the stage for its expanded use in 2025 3. The platform is increasingly viewed as a viable mechanism for settling commodity trades outside the dollar system, a prospect made more tangible by Saudi Arabia's participation [4].

Trade and FX Markets: Underlying Momentum

The infrastructural advancements in Q1 were mirrored by strong underlying metrics in trade settlement and foreign exchange markets. In a significant milestone, the share of China's own cross-border trade settled in yuan surpassed the 50% threshold, reaching 54.3% in March 2025 [5]. This indicates that a majority of transactions involving Chinese entities are now being conducted in their native currency, insulating them from dollar volatility and reducing transaction friction.

In the global foreign exchange markets, the yuan also demonstrated steady growth. According to a 2025 survey by the Bank for International Settlements, the yuan's share of daily global FX turnover rose to 8.5%, up from 7% in 2022 [6]. This solidified the yuan's position as the world's fifth-most traded currency, behind the dollar, euro, yen, and pound.

This growing liquidity is a critical prerequisite for the currency's broader international acceptance, making it easier for global firms to acquire, hold, and use the yuan.

These trends were underpinned by a robust domestic economic performance, with China's GDP growing by a healthy 5.4% year-on-year in the first quarter, providing a stable foundation for the yuan's international expansion [7].

Country-Level Analysis: Building New Blocs

The infrastructural advancements of the first quarter were not abstract; they were targeted at specific regions and countries, revealing a clear strategy of building influence through new financial corridors. The focus was on deepening ties with key trading partners in the ASEAN bloc and resource-rich nations in the Middle East, alongside strengthening the financial axis with Russia.

The ASEAN-Middle East Digital Currency Corridor

The launch of the digital yuan cross-border system on March 17 was the quarter's headline event, directly connecting China with ten ASEAN nations and six Middle Eastern countries [1, 2]. While a complete official list of all 16 participating nations has not been published, the strategic intent is clear.

For the ASEAN bloc, this new payment rail offers a significant efficiency boost for the dense web of supply chains that crisscross the region. By enabling direct yuan-based settlement, it reduces reliance on the dollar as an intermediary currency, cutting transaction costs and settlement times. This move deepens China's economic integration with its largest trading partner, making the yuan the de facto currency for regional trade.

For the Middle East, the implications are even more profound. The inclusion of six nations from this energy-rich region opens a direct channel for yuan-denominated oil and gas sales. This has long been a strategic goal for Beijing, and the new infrastructure provides a practical, efficient mechanism to achieve it. The participation of the United Arab Emirates (UAE), a key financial hub, is particularly noteworthy, as it provides a gateway for the yuan to the wider region.

Saudi Arabia and mBridge: A Strategic Partnership

Complementing the digital yuan's bilateral system, the multilateral mBridge platform continued to mature, having reached its Minimum Viable Product (MVP) stage in late 2024 [3]. The most significant development solidifying in this quarter was the integration of Saudi Arabia, which joined the project in 2024.

Why it matters: Saudi Arabia's pratical participation transforms mBridge from a general-purpose payment platform into a potential vehicle for settling large-scale commodity trades. As the world's largest oil exporter, Saudi Arabia's involvement provides a credible foundation for a future where energy contracts could be priced and settled in a basket of CBDCs, including the yuan, entirely outside the dollar-based system. This represents a slow but steady erosion of the petrodollar's foundation.

Outlook: The Architecture Takes Shape

The first quarter of 2025 stands out as a period where the strategic vision for a more yuan-centric global financial system began to translate into concrete reality. The launch of the dedicated digital yuan cross-border network is a long-term game-changer, creating the first truly viable, state-backed alternative to the existing payment rails. Unlike previous efforts that still relied on parts of the legacy system, this new infrastructure is designed to be fully independent.

Looking ahead to the second quarter, the key will be to observe the initial adoption and transaction volumes on this new network. While the infrastructure is now in place, its success will depend on the willingness of international partners to embrace it. The parallel progress of the mBridge platform suggests a dual-track strategy, offering both a China-led system and a more collaborative, multilateral option to potential partners.