China's currency grows internationally through financial links, not just trade

The international use of China's currency, the Renminbi, is now driven more by financial connections than by trade. This means countries with strong banking ties to China are increasing their use of the currency faster.

For years, the conventional wisdom was that China's currency would spread globally as its trade expanded. This paper shows that financial ties, like banking relationships and investment licenses, are now more important. This shift means that China's financial policies, not just its trade volume, will increasingly shape the global reach of the Renminbi.