Deutsche Bank sees supply chains driving yuan’s rise in global trade
The global rise of the renminbi, the Chinese currency also known as the yuan, is being driven by shifting supply chains rather than a campaign against the US dollar, according to a senior Deutsche Bank executive, following the German lender’s appointment as Europe’s first non-Chinese renminbi clearing house. Konrad Haunit, Deutsche Bank’s head of multinational corporate coverage for Asia-Pacific,…
Deutsche Bank has identified supply chain shifts as the primary catalyst behind the growing prominence of the Chinese yuan in global trade, rather than any concerted opposition to the US dollar, according to a senior executive at the German financial institution. Konrad Haunit, Deutsche Bank's head of multinational corporate coverage for Asia-Pacific, Middle East, and Africa, emphasized that the yuan's usage has been steadily increasing over the past five years due to evolving business models and supply chains.
The People's Bank of China recently designated Deutsche Bank as Europe's inaugural non-Chinese yuan clearing house, granting the bank the authority to clear and settle cross-border yuan transactions in Frankfurt. Haunit stressed that this appointment is of significant importance to the bank, as it will bolster the long-term expansion of the offshore yuan ecosystem.
While he doubted that the yuan could completely replace the US dollar, Haunit attributed the yuan's rise in global trade to the implementation of established commercial practices in specific trade corridors, rather than a sudden and widespread global shift. He attributed the deeper transformation to the Covid-19 pandemic, rather than geopolitical factors.
The pandemic prompted companies to reconsider their supply chains, leading them to focus on flexibility by exploring alternative suppliers, production sites, and trade routes to maintain operations when one link fails. Moreover, tariff volatility has further reinforced this trend, compelling manufacturers to redirect goods across markets as trade conditions fluctuate.
Haunit highlighted that the significance of Chinese innovation, goods, and supply chains will only continue to grow. He provided examples of industries where clients are increasingly following China's expanding manufacturing scale, such as Chinese electric vehicle maker BYD's growing exports of batteries and pharmaceuticals, as well as Chinese contractors' construction projects in the Middle East.
Written by urgent.news from SCMP Business's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
