Boom in Chinese Investment in Central Asia: Yuan Demand Rising

Amidst China’s surging investments in mineral-rich Central Asia, strong demands have emerged to further increase the use of the Chinese currency, the yuan (renminbi), in international trade. According to economists and investment analysts, there is no alternative to using the yuan to reduce currency risks and excess costs for multinational and Chinese enterprises engaged in the region’s infrastructure and energy sectors.

Speaking at a recently held investment panel discussion, experts noted that capital inflows from China have flooded wind, solar, nuclear energy, and various mega-infrastructure projects under Beijing’s Belt and Road Initiative (BRI). Long Jisheng, Chairman and CEO of the China-based environmental solutions company SUS Environment, stated that the majority of machinery and technology utilized in Central Asia are imported directly from China. Consequently, reducing reliance on the US dollar in transactions and shifting directly to the yuan will substantially mitigate risks associated with exchange rate volatility.

Analysts observe that due to global dollar instability and geopolitical uncertainties, emerging economies are rapidly pivoting toward their own currencies or dollar-alternative systems in global trade. Lu Lei, Deputy Governor of the People’s Bank of China (the country’s central bank), recently clarified that the internationalization of the Chinese currency is a continuous and irreversible global trend.