The yuan is gaining ground in trade between China and Africa.

In Zambia, Chinese mining companies can now pay certain taxes and fees in yuan. In Kenya, part of the debt contracted to finance the railway line connecting Nairobi to Mombasa has been converted from dollars to the Chinese currency.

This movement also concerns financial infrastructures. In Angola, a major commercial bank is set to soon integrate the Cross-Border Interbank Payment System (CIPS), the cross-border payment system established by China. On its part, Standard Bank already allows payments in yuan in 19 African countries.

This development accompanies the intensification of Sino-African trade. China is Africa’s largest trading partner and wants transactions between the two parties to be settled directly in its currency, without always going through the dollar.

A currency still governed by Beijing

However, the progression of the yuan remains limited by several constraints. The Chinese currency is not freely convertible, and its value as well as capital movements are still closely controlled by Beijing authorities. It also represents a relatively small share of international payments compared to the dollar.

For African countries, using the yuan can reduce exposure to dollar fluctuations and facilitate certain settlements with China. But it can also increase their dependence on Beijing, especially when the Chinese currency is used for debt repayment or payment of revenues related to mining activities.

China does not yet have the means to supplant the dollar in global trade. Nevertheless, by developing payments in yuan, it aims to gradually change financial practices in countries where its commercial, industrial, and infrastructural influence is already significant.