Chinese banks ramp up overseas investments as low domestic rates bite

The RMB’s share of global trade finance surged to 8.5% in early 2026.

Chinese banks are doubling down on offshore investment as onshore rates remain low, with overseas assets increasingly denominated in renminbi (RMB), said Natixis Asia Research.

“Given the downbeat domestic economic momentum, it’s foreseeable that China will keep the rates accommodative, which would continue to erode banks’ profitability. In that case, the overseas expansion may be increasingly key to understanding the playbook of Chinese banks,” said Natixis’ Alicia Garcia-Herrero and Haoxin Mu.

As onshore rates keep downbeat while overseas rates heighten, Chinese banks have doubled down on offshore investment to arbitrage from the gap, Garcia Herrero and Mu wrote in the 8 July 2026 report, “Chinese banks overseas expansion increasingly denominated in renminbi.”  

The RMB’s share of global trade finance surged to 8.5% in early 2026 from 1.8% in 2022, Natixis said.

RMB loans also surged aggressively—substituting and even exceeding outstanding foreign exchange (forex) loans—after the People’s Bank of China (PBOC) amended its framework for overseas RMB loans.

The PBOC had added a standardized process, clearer guidelines, and a lower currency risk adjustment factor to encourage more RMB disbursement, Natixis said.

But whilst the yuan has made much progress in the global use of trade settlements and cross-border financing, it remains lackluster as an investment currency, Natixis said.

“As China pushes forward RMB’s internationalization and financial opening, the PBoC may need to prevent any expectation of unilateral depreciation, which happened through 2023-2025 when uncommon volatilities were observed in the CNH market,” Garcia Herrero and Mu wrote.

With RMB gaining significant traction in cross-border settlements, regulators' focus may fall on the deepening of the RMB financial pool to attract more foreign investors, they said.

In an interview with Asian Banking & Finance earlier in 2026, HSBC’s global head of RMB internationalisation set expectations that the investment flow between China and the rest of the world will continue.

Vina Cheung said that the Chinese currency will “definitely be one of the good options for cross-border settlements, including investments.”

“We do see very supportive market conditions that the currency can play a bigger role in the global financial system,” Cheung said.

Chinese banks were earlier reported to be slashing their share of USD bonds, whilst the pace of increase on bond investments in the Euro and other foreign currencies sharply increased, according to data from the Bank of America (BofA).