China’s Asian Infrastructure Investment Bank (AIIB) is backing a wave of renminbi bonds, marking a significant step in the internationalization of China’s currency. This move is part of China’s efforts to increase the global presence of the renminbi, currently accounting for less than 1% of international bond issuances. The AIIB’s support is expected to enhance China’s bond products and expand the use of Special Drawing Rights (SDR).

China has become the world’s largest official creditor, surpassing the World Bank and the IMF. The renminbi’s share in China’s official lending has grown steadily, reaching 11% between 2000-2017, with a higher share in Asia and Africa. The scale of RMB bonds issued in China by foreign entities has grown rapidly, estimated to reach RMB 6.3 trillion to RMB 7.4 trillion, representing 11-13% of China’s total bond market.

The AIIB’s backing of renminbi bonds has significant implications for global finance and trade. It underscores China’s commitment to increasing the renminbi’s global influence and diversifies investment opportunities in China’s bond market. The World Bank projects a 5.6% GDP growth in 2023, led by a rebound in consumer spending. This growth potential, combined with the renminbi’s growing presence, makes China an increasingly important player in global markets.

As China continues to promote the renminbi’s internationalization, its global economic influence is likely to expand. The AIIB’s support for renminbi bonds is a critical step in this process. With the renminbi’s growing presence in international bond markets and official lending, China is poised to shape global finance and trade. The world will be watching as China’s economic growth and influence continue to unfold, reshaping the global economic landscape.