RMB Internationalisation in Australia's Trade and Investment with China

<p dir="ltr">The internationalisation of the Renminbi (RMB), the currency of the People’s Republic of China (PRC), is one of the most significant structural changes in the global financial system in recent decades. Since introducing cross-border trade settlement in 2009, the PRC has pursued a phased approach to expanding the RMB’s international use, aiming to reduce reliance on the US dollar, lower transaction costs for PRC firms and enhance its role in global financial governance while maintaining capital controls. </p><p dir="ltr">Given the PRC’s role as its largest trading partner, Australia is well positioned to benefit, yet RMB usage in bilateral trade remains limited. In 2023-2024, only 0.2 percent of Australia’s total merchandise exports and 1.4 percent of imports by value were invoiced in RMB, with higher uptake in niche sectors such as pharmaceuticals and precision instruments. Offshore RMB deposits and loans in Australia stood at around AU$10 billion and AU$8 billion respectively in December 2024, while issuance of RMB-denominated Dim Sum bonds has slowed since 2023 due to shifting interest rate conditions. Despite this, PRC banks’ Australian branches show increased Dim Sum bond issuance in Hong Kong. As of July 2025, they had 100 RMB bonds outstanding with a cumulative value of AU$13 billion. These branches are the go-to RMB bankers for PRC firms expanding in Australia, and the uptick in offshore issuance indicates they have been tapping lower-cost RMB funding to support both their own balance sheets and their clients’ financing needs in Australia. </p><p dir="ltr">Firm-level interviews show Australian companies adopting RMB selectively, citing benefits such as pricing flexibility, market access and natural hedging, but facing barriers including US dollar dominance, counterparty reluctance, operational hurdles and limited hedging tools. PRC firms in Australia use RMB mainly for intra-group transactions or RMB-preferred clients, with broader uptake constrained by commodity pricing norms and market illiquidity. However, the overseas expansion of PRC manufacturing enterprises and their production capacity, particularly in new manufacturing sectors such as machinery and new energy equipment is encouraging increased use of the RMB in trade settlement within those supply chains. </p><p dir="ltr">Australian investment in RMB assets remains small at AU$40.37 billion, primarily in equities, and modest compared to investments in the US or UK. Overall, RMB internationalisation in Australia is advancing slowly and unevenly, with greater adoption dependent on improved offshore RMB liquidity and better risk management instruments. For Australian banks, there is a clear incentive to remain engaged as without deeper RMB capabilities, corporates may bypass them in favour of PRC banks. </p>