China Sets Out Wider Yuan Use and Financial Opening Alongside Stronger Market Safeguards

A bigger global role for the yuan, with security at the center

China's State Council has outlined plans to expand international use of the yuan, attract more foreign financial institutions and long term investment, and accelerate development of a yuan payment system under independent Chinese control. The same agenda puts the protection of overseas financial assets and foreign exchange reserves alongside further market opening.

People's Bank of China Governor Pan Gongsheng presented the report on financial work on November 3, 2026, to the 25th session of the Standing Committee of the 14th National People's Congress. Published on the legislature's website on November 5, it reviews financial work since October 2025 and sets out five priorities covering monetary policy, regulation, financing for the economy, financial reform and opening, and risk management.

The figures show the scale of the system behind those plans. Financial institutions held more than 560 trillion yuan in assets at the end of June 2026. Foreign exchange reserves stood at $3.4 trillion at the end of September. China also had 32 effective bilateral agreements to swap national currencies and had authorized 42 yuan clearing banks.

The report connects those international ambitions with domestic concerns: keeping borrowing costs low, maintaining orderly stock and bond markets, handling debt linked to local government financing vehicles, and sustaining financing for eligible property projects. Its central policy choice is to pursue broader financial connections while strengthening the institutions and safeguards that support them.

What wider international use of the yuan would mean

The State Council wants the yuan to perform more functions outside China: setting prices, making payments, financing investments and serving as a reserve currency. These are related but different uses. A company might price an export contract in yuan, receive payment in yuan, or borrow yuan to finance a factory. A foreign central bank might hold yuan assets as part of its reserves.

The report also calls for developing offshore yuan markets, meaning markets for yuan deposits, loans and financial products outside mainland China. Those markets give businesses and investors more ways to obtain and use the currency without carrying out every transaction through the mainland financial system.

Currency swap agreements and clearing banks provide practical support. A swap agreement allows participating monetary authorities to exchange currencies under agreed terms. Clearing banks help process yuan transactions. The report says Hong Kong and Turkey were among the places where arrangements were advanced for regular use of yuan swap funds.

China also plans to make foreign exchange transactions easier for cross border trade, investment and financing. For businesses, the practical aim is to simplify moving money for legitimate commercial activity. The report pairs that objective with a commitment to keep the yuan exchange rate broadly stable at a reasonable, balanced level.

Payments infrastructure becomes part of the opening strategy

The State Council calls for faster construction and development of a yuan cross border payment system under independent Chinese control. Payment infrastructure is the network of institutions, rules and technology that allows money to move between banks and reach its intended recipient.

The report also proposes better governance and rules for financial infrastructure, together with orderly connections between domestic and overseas systems. Linking systems can make transactions easier, while the rules governing those connections determine how payments are processed, risks are managed and responsibilities are assigned.

Several developments are listed for the review period. A cross border payment connection with the United Arab Emirates went live, and functions of a unified gateway for cross border QR code payments were improved. The report also describes the digital yuan's positioning as moving from cash to deposit money. In everyday terms, that concerns whether digital yuan holdings function more like cash or money held in an account; the passage gives no detailed account of the operating changes.

The international agenda also includes participation in global financial governance reform, support for the International Monetary Fund's Shanghai center, and regional financial cooperation through arrangements including the Chiang Mai Initiative Multilateralisation. These sit alongside the explicit commitment to protect China's reserves and other financial assets abroad.

Shanghai, Hong Kong and foreign institutions get distinct roles

Shanghai and Hong Kong feature prominently in the opening plans. The report calls for steady progress in building Shanghai as an international financial center and records the release of an action plan for developing offshore finance there.

Hong Kong is assigned a connected but distinct role. The State Council pledges support for implementing the city's first five year plan and strengthening its position as an international financial center. It also records work to support a comprehensive financial trading platform, improve the southbound channel of Bond Connect and bring Chinese government bond futures to Hong Kong.

Bond Connect's southbound channel gives eligible mainland investors access to bonds traded overseas through Hong Kong. Government bond futures allow market participants to manage exposure to changes in bond prices and interest rates. Together, these measures concern both access to investments and the tools used to manage them.

Foreign institutions are another part of the plan. Five foreign banking and insurance institutions received approval to begin operations during the review period, and the establishment of Citigroup Securities (China) was approved. The report also records preparatory approval for Visa's bank card clearing institution. It calls for attracting more foreign institutions and long term capital, while making it easier for qualified overseas issuers to sell yuan bonds in China, commonly called panda bonds.

Monetary support continues, without a new rate timetable

The State Council says China should continue a moderately loose monetary policy and use several tools to keep liquidity ample. Liquidity means money that banks and other market participants can readily use to make payments, lend or meet withdrawals.

The policy goal is to align growth in money supply and aggregate financing with expected economic growth and the general price level. Aggregate financing, also called social financing, is a broad measure of funds reaching the economy through channels such as bank loans, bonds and share issuance.

At the end of September 2026, outstanding aggregate financing was 7.1% higher than a year earlier, while broad money supply was up 7.2%. In September, the weighted average interest rate on newly issued business loans was 2.96%, and the corresponding rate for new individual housing loans was 3.05%. The report describes major interest rates as being at historically low levels.

The next steps include improving interest rate management and supervision, reducing intermediary financing charges and continuing to assess the monetary policy framework. No dates or amounts are given for future rate changes, reserve requirement changes or payment system expansion. The document sets the policy direction rather than a calendar of specific moves.

Financing figures show the focus on technology and business

China recorded 33 trillion yuan in new aggregate financing from October 2025 through September 2026. Over that period, 88 companies completed initial public offerings on the Shanghai and Shenzhen A share markets, raising 247.2 billion yuan. Nearly nine in 10 were classified as high technology enterprises.

Existing listed companies raised another 776.9 billion yuan through refinancing, more than three times the amount raised through those initial public offerings. Together, the two categories brought in about 1.02 trillion yuan. The comparison shows how much of the equity financing described in the report went to companies already listed.

The bond market's technology segment had issued a cumulative 3.3 trillion yuan in technology innovation bonds since its creation in May 2025. Loans covered by the government's five priority areas of finance grew 10.1% from a year earlier at the end of September 2026. Those areas cover technology, green development, inclusive finance, pensions and digital finance.

The report calls for further support for technology innovation, small businesses and infrastructure, as well as more technology insurance and leasing. It also identifies overdue business payments as a financing problem: authorities established a liquidity support tool for clearing arrears and pressed major companies with money available to pay outstanding bills. For a small supplier, receiving an overdue payment can be as consequential as obtaining a new loan.

Market support and financial buffers move together

Central Huijin, a state investment company with holdings in major financial institutions, is to receive support to perform a role similar to a market stabilization fund. The proposal sits alongside plans to broaden the sources, channels and methods through which medium and long term money enters capital markets.

The report calls for continued use of monetary policy tools supporting capital markets and for stable conditions in stocks, bonds and foreign exchange. During the review period, authorities encouraged participation by social security funds, securities fund institutions and insurers, and established liquidity support to help nonbank institutions respond to large redemption demands.

At the end of September, commercial banks had a capital adequacy ratio of 15.4% and a bad loan ratio of 1.5%. Capital adequacy measures the cushion available against risks on bank assets; the bad loan ratio measures the share of loans classified as troubled. Insurers' comprehensive solvency adequacy ratio was 177.7%, while average risk coverage ratios were 294.9% for securities companies and 201.6% for futures companies.

The report says the yield on Chinese government bonds maturing in 10 years operated near 1.65%. The yuan appreciated about 5.8% against the US dollar between October 2025 and September 2026. These figures place the next phase of opening against a period the government describes as broadly stable financial market conditions.

Property and local financing debt remain major tasks

China plans to keep its property financing whitelist mechanism running as a regular arrangement. Under that mechanism, eligible property projects are identified for financing support through coordination between local authorities and financial institutions. Commercial banks had cumulatively approved more than 8.4 trillion yuan in loans through the mechanism, according to the report.

The State Council says the mechanism should meet reasonable financing needs. It also records measures to lower the minimum down payment for loans to buy commercial premises and provide interest subsidies for residential housing loans. For developers and buyers, financing conditions affect whether projects can continue and how much borrowing costs.

Local government financing vehicles are another focus. These entities have been used to finance local projects. The report says the number of remaining vehicles nationwide was 92% lower at the end of September 2026 than at the end of March 2023. Outstanding operating financial debt was 79% lower at the end of June 2026 than at the same March 2023 reference point.

The next task is to support their transition into businesses operating on commercial terms after they exit financing vehicle status. Authorities also plan to continue handling risks in priority regions and institutions. The report records the takeover of Zhongbang Bank and the use of plans tailored to individual provinces to address risks at smaller financial institutions.

Stronger supervision accompanies easier access

The State Council pairs its opening agenda with tighter supervision of financial institutions, products and cross border activity. During the review period, regulators strengthened oversight of related party transactions, large investments and lending, and pursued action against financial fraud, market manipulation and illegal financial operations.

The next stage includes exploring artificial intelligence in financial administration and services while managing risks from the models used. Consumer protection, coordination between central and local authorities, and further work on the international anti money laundering assessment are also listed priorities.

Legislation is part of that effort. The report says a draft financial law and draft amendments to the People's Bank of China Law had been submitted to the legislature's Standing Committee. Amendments to the Banking Supervision Law had completed a second review, while work continued on financial stability legislation and revisions affecting banking, insurance, foreign exchange and securities.

For foreign institutions and domestic businesses, the policy package links wider access with more detailed oversight. Easier investment and payment channels are being pursued within a framework that also gives priority to financial security, consumer protection and enforcement.

The dates behind the policy agenda

The report combines measures already taken, financial data from several reporting dates and proposals for the next stage. Its main milestones are:

• May 2025: The bond market's technology segment was created.
• October 2025 to September 2026: New aggregate financing reached 33 trillion yuan, and the yuan appreciated about 5.8% against the dollar.
• End of June 2026: Financial institutions held more than 560 trillion yuan in assets.
• End of September 2026: Foreign exchange reserves stood at $3.4 trillion, and commercial banks' bad loan ratio was 1.5%.
• November 3, 2026: Pan Gongsheng presented the State Council report to the legislature's Standing Committee.
• November 5, 2026: The legislature published the report.

The next phase brings together international expansion and domestic repair. More yuan transactions, foreign participation and market connections are planned alongside continued support for property financing, local debt restructuring and market stability.

Key Points

• China plans wider international use of the yuan and faster development of payment infrastructure under independent Chinese control.
• The State Council supports further financial opening in Shanghai and Hong Kong and more participation by foreign institutions and long term investors.
• Moderately loose monetary policy will continue, with a focus on liquidity, financing costs and exchange rate stability.
• Central Huijin is to play a role similar to a market stabilization fund.
• Property financing, local financing vehicle transitions and risks at financial institutions remain central domestic priorities.
• Foreign exchange reserves stood at $3.4 trillion at the end of September 2026.