CONTENTS
- 1. China Expands the Opening of Renminbi Finance
- - Identified Regulatory Changes
- 2. Structural Risks for Korean Companies
- - Currency Structure Risk
- - Financial Fragmentation Risk
- - Funding Strategy Risk
- - Digital Renminbi Adoption Risk
- 3. Proactive Items to Review During the Transitional Period
- - Future Policy Scenarios and Market Variables
- 4. An Integrated Response Strategy for Changes in the Currency Environment
- - Daeryun Law Firm LLP's Response Strategy
1. China Expands the Opening of Renminbi Finance
The Chinese government has recently expanded the scope for the use of overseas renminbi significantly.
It has broadened the permissible use of overseas renminbi funds, which had previously been limited to trade settlement purposes, to include corporate working capital and capital expenditure, and it has raised the total overseas renminbi lending quota from 100 billion yuan to 200 billion yuan.
The direction has thus become clear: rather than keeping the renminbi confined to a means of settlement, China intends to broaden its use across corporate finance as a whole.
This forms part of a strategy to reduce reliance on the dollar settlement network and to build, in stages, an external financial safety net based on the renminbi.
Accordingly, companies may need to reexamine their proportion of China-related transactions and their currency exposure structure, and to review their financing strategies proactively in preparation for the possibility of expanded renminbi borrowing.
Identified Regulatory Changes
(1) Expanded Scope for the Use of Renminbi
- Limited to trade settlement → permitted for corporate operations and capital expenditure
(2) Increase in the Total Lending Quota
- 100 billion yuan → 200 billion yuan
- a basis laid for expanding the scale of overseas funding
(3) Interest Rate Environment in the Offshore Market
- As renminbi liquidity expanded in the Hong Kong offshore market, cases emerged in which renminbi lending rates were set lower than Hong Kong dollar rates in certain segments
- Accordingly, the need to compare borrowing costs for renminbi when investing overseas has grown
(4) Internationalization Indicators
- As of January 2026, the renminbi's share of global trade finance settlement was 8.3% (per SWIFT data, second in the world)
- The outstanding balance of overseas renminbi loans stood at 2.5246 trillion yuan
- Its share of global foreign exchange reserves was 1.93%
The renminbi's share as a foreign reserve currency remains low, but its presence in actual transactions and in the financial domain is expanding rapidly.
2. Structural Risks for Korean Companies
The structural risks for Korean companies arising from these changes are as follows.
Currency Structure Risk
Companies with a high proportion of transactions with China need to reconfigure their settlement currency and borrowing currency.
If renminbi borrowing expands, additional foreign exchange risk can arise under a structure in which the revenue currency and the borrowing currency do not match.
Financial Fragmentation Risk
If tensions between the United States and China intensify, a structure in which the dollar settlement network and the renminbi financial network operate in parallel may become entrenched.
In addition, the path of fund movement may be restricted depending on the counterparty's currency choice.
Funding Strategy Risk
The competitiveness of renminbi interest rates may serve as a short-term cost-saving factor, but the volatility of the cost structure may increase in the event of policy changes or sharp exchange rate fluctuations.
Digital Renminbi Adoption Risk
The digital renminbi is a central bank digital currency (CBDC) issued by the People's Bank of China, and as of the end of 2025 its cumulative transaction volume reached 19.5 trillion yuan.
It currently operates primarily for retail payments, but pilot applications to business-to-business transactions and to some cross-border settlements are also being conducted in parallel.
3. Proactive Items to Review During the Transitional Period
Companies need to conduct a structural review of the following areas.
• Simulation of foreign exchange and interest rate risk in the event of renminbi borrowing
• Review of the fund movement structure in preparation for fragmentation of the global settlement network
• Examination of compliance with foreign exchange and financial regulations and of internal control systems
Changes in the currency environment are an area that simultaneously affects the borrowing structure, contractual currency clauses, foreign exchange regulations, and tax treatment.
In the course of reviewing an expansion of renminbi borrowing, companies should comprehensively examine the restrictive covenants of existing financial agreements, the adequacy of foreign exchange hedging strategies, and the currency exposure of overseas investment structures.
In particular, where an offshore funding structure is used, the possibility that foreign exchange regulatory and tax issues will arise together cannot be ruled out.
In such circumstances, an approach that redesigns the financing structure as a whole, rather than addressing individual issues, is required.
Future Policy Scenarios and Market Variables
The current strategy for the internationalization of the renminbi appears to have entered a phase of gradual expansion.
In the short term, the direction of strengthening offshore renminbi lending functions while increasing usage in trade and investment settlement is likely to continue, and accordingly, an expansion of liquidity in the offshore market centered on Hong Kong may proceed in parallel.
In the medium term, cross-border settlement experiments using the digital renminbi may expand, and a trend may emerge in which renminbi financing linked to strategic industries and to the *Belt and Road (一帶一路) projects is strengthened.
(*Belt and Road projects: the new Silk Road strategy that China is pursuing)
This is understood as a move to gradually expand renminbi-based financial infrastructure.
That said, full opening of the capital account or an expansion of convertibility is an issue that carries a heavy policy burden.
Considering external financial stability and the need to defend the exchange rate, the possibility that the pace and scope of internationalization will be adjusted depending on circumstances remains open as well.
Therefore, companies need to proceed with advance reviews, assuming how their financing structures may change depending on the direction in which policy develops.
• A case in which financial fragmentation accelerates as tensions between the United States and China intensify
• A case in which exchange rate volatility expands
If a company begins to respond only after the relevant domestic and foreign systems have been fully established, the possibility that funding conditions or the exchange rate environment will already have formed unfavorably cannot be ruled out.
Now that the policy direction of expanding renminbi finance has been confirmed, a review of the financing structure and settlement currency strategy should proceed early and in parallel.
4. An Integrated Response Strategy for Changes in the Currency Environment
The expansion of renminbi finance is a matter in which the contractual, financial, foreign exchange, and tax domains are interlocked at the same time.
For a company to review this on its own, the interpretive standards and the scope of regulatory application may operate in a complex manner.
In response, Daeryun Law Firm LLP assists with responding to changes in the currency structure in the following ways.
Daeryun Law Firm LLP's Response Strategy
Area | Scope of Response |
Diagnosis of Currency and Borrowing Structure | Analysis of the proportion of China-related transactions and of currency exposure, and review of the design of the renminbi borrowing structure and of foreign exchange risk management strategies |
Review of Financial Agreement Risk | Analysis of currency restriction, early repayment, collateral, and cross-default clauses within existing loan agreements, and advice on adjustment strategies |
Examination of Foreign Exchange and Regulatory Compliance | Review of the foreign exchange reporting and approval requirements for offshore funding structures, and advance diagnosis of regulatory risk |
Redesign of Tax and Investment Structure | Analysis of the tax implications of renminbi borrowing, and proposals for improving the structure of overseas investment fund flows |
Daeryun Law Firm LLP forms a task force of 1 to 20 members, composed of attorneys handling corporate matters, attorneys handling financial matters, attorneys responsible for international transactions, certified public accountants, tax accountants, and customs specialist advisors who hold customs broker qualifications, to comprehensively diagnose the financing structure as a whole.
By reviewing borrowing structure design, financial agreement analysis, examination of foreign exchange regulatory compliance, analysis of tax implications, and review of overseas investment fund flows all at once through a single point of contact, the firm manages, in an integrated manner, the derivative risks that accompany a change in currency strategy.
The internationalization of the renminbi is a gradual but structural change, and the choice of currency is shifting into the domain of fund-structure management.
Now that the direction of policy has been confirmed, only companies that review their financing structures and contractual frameworks can keep the change within a manageable scope.
