London Daily

Focus on the big picture.
Monday, Jul 21, 2025

American Express: new yuan card settlement network promotes global use of China’s currency

American Express: new yuan card settlement network promotes global use of China’s currency

Beijing’s decision to let American Express join national clearing network will boost the yuan’s circulation and its role in global finance, analysts say. The move has the added benefit of reducing China’s reliance on the US dollar payments system as bilateral relations between Washington and Beijing deteriorate
American Express’ entry into China’s US$27 trillion payment market may help increase the use of the yuan across borders amid worsening US-China tensions, according to analysts.

Since last week, Chinese commercial lenders Minsheng Bank, Guangfa Bank, Ping An, Shanghai Pudong Development Bank and China Merchants Bank have launched American Express cards whose bills can be paid in yuan both inside and outside China. Previously, offshore card transactions were allowed to be settled only in foreign currencies.

The joint venture between American Express and LianLian DigiTech, called Express (Hangzhou) Technology Services, obtained approval in June from China’s central bank for a network clearing license, making American Express the first foreign company allowed to settle yuan-denominated credit card transactions both abroad and on the mainland.

The clearing of card transactions refers to the settlement of transactions and the transfer of funds from one bank to another, and by a bank to a merchant that accepts the card when someone uses it to make purchases.

Beijing’s decision to let the American company participate in its clearing network will help channel more yuan funds abroad, boosting the yuan’s circulation and its role in global finance, analysts said. The move has the added benefit of reducing China’s reliance on the US dollar payments system amid worries that the United States could try to impose financial sanctions on the country because of deteriorating bilateral relations.

“If Chinese consumers can go to other countries, and their payments there can be cleared in yuan, then this would increase the use of the yuan and help with its internationalisation progress,” said Nathan Chow, senior China economist at DBS Bank. “The move is also a signal that China is not sanctioning the businesses of American companies, despite tensions.”

The People’s Bank of China (PBOC) has also approved an application by Mastercard’s China joint venture to conduct bank card clearing operations in the country, but the US credit card company has not yet received a yuan network clearing license. Rival card giant Visa submitted its application in early 2018 and is still awaiting approval.

China aims to integrate its domestic payment services into the world’s financial system to create a global yuan clearing and settlement system for trade and investments. The development of domestic bank card firm Union Pay, as well as mobile payments apps from Alibaba’s Alipay and Tencent’s WeChat, have lowered the costs and increased the convenience of using the yuan. Alibaba owns the South China Morning Post.

“I’m already used to making purchases through mobile payments. Even when you go to Thailand for fun, it has been easy to pay with Chinese apps at the convenience and drug stores there,” said Cat Xiong, 32, who works in the social studies education sector in southern China.

American Express said the bank card clearing network, being built by the joint venture, will process both online and offline payment transactions, and the company will cooperate with leading Chinese mobile wallet service providers, according to a statement in June.

Its advantage lies mainly in its expansive cross-border international network that can accommodate both Chinese travelling abroad and foreigners visiting China, analysts said.

“American Express is trying hard not to miss the second boat in China. They already did with the first wave as China blocked foreign credit card providers and developed Union Pay, followed by Alipay and WeChat,” said Alicia Garcia Herrero, chief economist for Asia-Pacific at French investment bank Natixis.

Morgan Stanley chief China economist Robin Xing Ziqiang said that after the slow progress in yuan internationalisation in recent years, it has again become a priority for Chinese policymakers to increase use of the yuan in light of the emerging post-coronavirus “multipolar world” resulting from geopolitical tensions.

The ratio of China’s foreign-related transactions conducted in yuan, excluding transactions via the Stock Connect and Bond Connect market-access initiatives, has surpassed its peak recorded in 2015. And the yuan’s share in international foreign exchange reserves passed 2 per cent in the first quarter, doubling from 2015, largely supported by the Russian government’s purchases of Chinese government bonds, Xing said.

Herrero cautioned that the growing sophistication of Chinese financial institutions did not necessarily mean that the yuan had reached a tipping point to become a fully fledged reserve currency. The hurdle to yuan internationalisation comes from getting sovereign wealth managers, merchants and consumers to accept the currency without China lowering its restrictions on capital flows while making the yuan freely convertible.

Ahead of the six-month review of the phase one trade deal by senior US and Chinese trade officials, PBOC governor Yi Gang said last weekend that China would fulfil its financial opening-up pledges agreed to in the deal, such as by allowing Wall Street’s trading houses to have wholly-owned brokerage and fund-management operations in China.

Some of China’s much-delayed financial opening-up measures were promised two decades ago as conditions for China’s entry into the World Trade Organisation in 2001.

“It is certainly a breakthrough for a foreign company to gain entry into the previously untouchable Chinese payment market,” said Allison Malmsten, a market analyst at Daxue Consulting. “It goes against the anti-globalisation direction of the Trump administration and represents the will of companies to collaborate across borders – creating an opportunity for finances to flow between the two countries.”
Newsletter

Related Articles

0:00
0:00
Close
Man Dies After Being Pulled Into MRI Machine Due to Metal Chain in New York Clinic
NVIDIA Achieves $4 Trillion Valuation Amid AI Demand
US Revokes Visas of Brazilian Corrupted Judges Amid Fake Bolsonaro Investigation
U.S. Congress Approves Rescissions Act Cutting Federal Funding for NPR and PBS
North Korea Restricts Foreign Tourist Access to New Seaside Resort
Brazil's Supreme Court Imposes Radical Restrictions on Former President Bolsonaro
Centrist Criticism of von der Leyen Resurfaces as she Survives EU Confidence Vote
Judge Criticizes DOJ Over Secrecy in Dropping Charges Against Gang Leader
Apple Closes $16.5 Billion Tax Dispute With Ireland
Von der Leyen Faces Setback Over €2 Trillion EU Budget Proposal
UK and Germany Collaborate on Global Military Equipment Sales
Trump Plans Over 10% Tariffs on African and Caribbean Nations
Flying Taxi CEO Reclaims Billionaire Status After Stock Surge
Epstein Files Deepen Republican Party Divide
Zuckerberg Faces $8 Billion Privacy Lawsuit From Meta Shareholders
FIFA Pressured to Rethink World Cup Calendar Due to Climate Change
SpaceX Nears $400 Billion Valuation With New Share Sale
Microsoft, US Lab to Use AI for Faster Nuclear Plant Licensing
Trump Walks Back Talk of Firing Fed Chair Jerome Powell
Zelensky Reshuffles Cabinet to Win Support at Home and in Washington
"Can You Hit Moscow?" Trump Asked Zelensky To Make Putin "Feel The Pain"
Irish Tech Worker Detained 100 days by US Authorities for Overstaying Visa
Dimon Warns on Fed Independence as Trump Administration Eyes Powell’s Succession
Church of England Removes 1991 Sexuality Guidelines from Clergy Selection
Superman Franchise Achieves Success with Latest Release
Hungary's Viktor Orban Rejects Agreements on Illegal Migration
Jeff Bezos Considers Purchasing Condé Nast as a Wedding Gift
Ghislaine Maxwell Says She’s Ready to Testify Before Congress on Epstein’s Criminal Empire
Bal des Pompiers: A Celebration of Community and Firefighter Culture in France
FBI Chief Kash Patel Denies Resignation Speculations Amid Epstein List Controversy
Air India Pilot’s Mental Health Records Under Scrutiny
Google Secures Windsurf AI Coding Team in $2.4 Billion Licence Deal
Jamie Dimon Warns Europe Is Losing Global Competitiveness and Flags Market Complacency
South African Police Minister Suspended Amid Organised Crime Allegations
Nvidia CEO Claims Chinese Military Reluctance to Use US AI Technology
Hong Kong Advances Digital Asset Strategy to Address Economic Challenges
Australia Rules Out Pre‑commitment of Troops, Reinforces Defence Posture Amid US‑China Tensions
Martha Wells Says Humanity Still Far from True Artificial Intelligence
Nvidia Becomes World’s First Four‑Trillion‑Dollar Company Amid AI Boom
U.S. Resumes Deportations to Third Countries After Supreme Court Ruling
Excavation Begins at Site of Mass Grave for Children at Former Irish Institution
Iranian President Reportedly Injured During Israeli Strike on Secret Facility
EU Delays Retaliatory Tariffs Amid New U.S. Threats on Imports
Trump Defends Attorney General Pam Bondi Amid Epstein Memo Backlash
Renault Shares Drop as CEO Luca de Meo Announces Departure Amid Reports of Move to Kering
Senior Aides for King Charles and Prince Harry Hold Secret Peace Summit
Anti‑Semitism ‘Normalised’ in Middle‑Class Britain, Says Commission Co‑Chair
King Charles Meets David Beckham at Chelsea Flower Show
If the Department is Really About Justice: Ghislaine Maxwell Should Be Freed Now
NYC Candidate Zohran Mamdani’s ‘Antifada’ Remarks Spark National Debate on Political Language and Economic Policy
×