The International Use of the Renminbi: Evidence from Japanese firm-level data

The use of the Chinese renminbi (RMB) is said to have been increasing in recent years for trade invoicing, due to active promotion policies by the Chinese government. However, only patchy information has been presented in the literature on the use of the RMB in Chinese trade. Since China plays the role of a regional and global manufacturing hub and foreign multinational companies (MNCs) actively operate there, it is necessary to investigate to what extent MNCs use the RMB for trade invoicing especially in their intra-firm trade, but no empirical evidence has been presented. Utilizing firm-level information obtained from large-scale questionnaire surveys, this study presents new evidence of the use of the RMB by Japanese MNCs operating in China and other Asian countries along their regional and global production network. We find that although the RMB is extensively used for local sales and procurement in China, Japanese MNCs in China mainly use the U.S. dollar and, to a lesser extent, the yen in trade with other countries. However, we also observe that Japanese MNCs in China increased the use of RMB in intra-firm trade with Japan. RMB transactions will be growing further if it becomes easier for MNCs to conduct marry and netting for their trade settlements.