China's foreign exchange conversion volume hit a record $2.8 trillion in December 2025, driven by a sharp reversal in corporate currency preferences as firms repatriated foreign earnings into renminbi. The shift reflects growing confidence in the yuan's stability and a strategic pivot toward domestic currency usage.
- FX conversion volume reached $2.8 trillion in December 2025, a record high.
- 6,200 Chinese enterprises reported repatriation of foreign earnings into renminbi.
- Yuan accounted for 58% of cross-border trade settlements, up from 52% in 2024.
- Yuan appreciated 2.1% against the U.S. dollar in December 2025.
- Foreign ownership of A-shares rose 18% in December, reflecting growing investor confidence.
- Regulators issued new capital flow monitoring protocols to manage market stability.
China’s foreign exchange conversion volume reached a record $2.8 trillion in December 2025, according to official trade data, marking a 37% year-on-year increase and the highest monthly level since data collection began. This surge was primarily fueled by a significant reversal in corporate behavior, with over 6,200 enterprises reporting currency repatriation activities, a rise of 42% from the previous year. Many firms, particularly in manufacturing and export sectors, are now converting foreign earnings—especially from U.S. and European markets—into renminbi instead of maintaining holdings in dollars or euros. The trend indicates a growing preference for the yuan, supported by a narrowing interest rate differential between China and major developed economies and a strengthening of the currency’s fundamentals. The People’s Bank of China reported that yuan-denominated transactions accounted for 58% of all cross-border trade settlements in December, up from 52% in the prior year. This shift has reduced foreign exchange exposure for Chinese corporations and lowered hedging costs, particularly for firms with long-term supply chain commitments in Asia. Market participants note that the surge in yuan usage coincides with a 2.1% appreciation of the currency against the U.S. dollar over the same period, driven by robust trade surpluses and a rebound in outbound investment. The increase in FX conversion activity has also prompted new regulatory guidance to ensure orderly market operations, with the State Administration of Foreign Exchange issuing updated capital flow monitoring protocols to prevent speculative spikes. The implications extend beyond corporate finance: financial institutions in Shanghai and Shenzhen have reported a 30% rise in yuan-denominated bond issuance and over-the-counter derivative trades. Global investors are reassessing their exposure to China’s financial markets, with foreign ownership of A-shares increasing by 18% in December, signaling renewed confidence in the domestic currency’s resilience.