China to boost yuan with overseas gold storage facilities as it challenges US hegemony

China will allow certain products traded on the Shanghai Gold Exchange to be delivered overseas by establishing storage facilities in other countries – part of a broader effort to promote the yuan and reduce reliance on the US dollar and US financial systems, according to top regulatory agencies.

In an action plan aimed at enhancing Shanghai’s cross-border financial services to support outbound investment and the Belt and Road Initiative, Chinese regulators said key financial platforms would be strengthened to better allocate global financial resources and enable deeper international investor participation in China’s markets.

“We will support the Shanghai Gold Exchange and other institutions in cooperating with overseas exchanges through product licensing, and expand the use of renminbi-denominated benchmark prices in major international markets,” according to a statement released on Monday by the People’s Bank of China, the National Administration of Financial Regulation, the State Administration of Foreign Exchange and the Shanghai Municipal People’s Government.

“We will explore the internationalisation of physical delivery for specific products [traded] on the Shanghai Gold Exchange by establishing offshore delivery and storage facilities.”

The action plan, which covers 18 key measures aimed at boosting Chinese businesses’ global competitiveness through enhanced cross-border financial services, includes support for increasing the use of the yuan, foreign currency exchange services, and reinsurance coverage for the Belt and Road Initiative.

In 2024, Shanghai’s total cross-border receipts and payments in yuan reached 29.8 trillion yuan (US$4.1 trillion), a 30 per cent year-on-year increase, making an important milestone in the integration of China’s financial system into the global market, Lu Lei, deputy governor of the People’s Bank of China, said at a briefing on Wednesday afternoon.