Global Majority nations are de-dollarizing trade with Panda Bonds and African banks
Inside China Business | December 13, 2024
Top African banks are key in the BRICS push to do more trade outside the US Dollar, and especially outside Western systems. By setting up branches inside China, African banks are able to borrow and lend in renminbi, the Chinese currency. This allows for cross-border trades to be settled in local currencies and RMB, instead of through USD-denominated letters of credit or debt markets. Panda Bonds are another tool, rapidly gaining in popularity and usage. Pandas are RMB bonds, sold to investors in Mainland China who want to diversify their fixed income investments to global borrowers. To borrowers, Panda Bonds offer lower interest costs than USD- or Euro-denominated debt, while also allowing for repatriation and currency swaps that are common in USD loans. Africa’s biggest banks, including those owned by African governments themselves, have set up in Mainland China and are increasingly integrated into China’s financial and industrial sectors. And large Chinese banks are heading the other way, investing heavily in Africa’s raw materials industries, and providing liquidity for Africa’s rising consumer class.
Resources and links:
Substack, for video transcript and direct links https://open.substack.com/pub/kdwalms…
South China Morning Post, African banks set up shop in China as Beijing pushes for yuan to eclipse US dollar https://www.scmp.com/news/china/diplo…
Statista, China’s African Trade Takeover https://www.statista.com/chart/26668/…
Africa’s Top 100 Banks 2024: Going global https://african.business/2024/09/fina…
S&P Global, Three Minutes In Panda Bonds: Why Issuance Is Surging https://www.spglobal.com/ratings/en/r…
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