From Tax Revenue to Debt: How China Is Strengthening the Renminbi's Influence in Africa While Undermining the US Dollar's Status

China is accelerating the promotion of the international influence of the Renminbi, with Africa becoming the main stepping stone. From accepting Renminbi for mining taxes, converting dollar-denominated debt into Renminbi, to encouraging trade and financing in Renminbi, multiple policies are taking place in many African countries. This not only reflects China’s attempt to reduce dependence on the dollar system but also highlights its effort to rally allies through these measures.

Zambia Sets a Precedent: Chinese Mining Companies Can Pay Taxes in Renminbi

Bloomberg reports that Zambia has become the first African country to officially allow Chinese mining companies to pay mining taxes and royalties in Renminbi. This measure was implemented in October last year and was recently announced publicly, symbolizing the first time Renminbi has been integrated into the core fiscal processes of an African country.

Since China is simultaneously Zambia’s largest copper buyer and one of its main creditors, settling some taxes in Renminbi is seen as a practical choice to reduce dollar demand and exchange rate risks. Tewodros Sile, Chief Advisor at Africa Practice, believes this could serve as a model for China to replicate in other African countries in the future:

China is seeking to further break the monopoly of the dollar in the international financial system. As African countries move toward currency diversification, this move helps strengthen China’s strategic position in Africa and its relationships with many key bilateral partners on the continent.

Debt Restructuring Breakthrough: Kenya and Ethiopia’s Choices

Beyond taxation, Renminbi is also expanding its influence through “debt Renminbization.” Kenya last October converted part of its dollar debt owed to China into Renminbi, involving a railway loan provided by China Export-Import Bank, amounting to about 5 billion USD. The Kenyan government estimates this move could save approximately 250 million USD annually in debt repayment costs.

Ethiopia has also been negotiating with China around the same time to convert some dollar debt into Renminbi. After sovereign default in 2023, Ethiopia is negotiating debt restructuring plans exceeding 15 billion USD with multiple creditors, with China remaining one of its largest creditors.

In this context, currency conversion is seen as a feasible option to reduce dollar volatility risks and extend fiscal buffers.

Africa as a Testing Ground: China Promotes Renminbi Financing and Trade Settlement

On a broader level, China is trying to expand the practical use cases of Renminbi through trade and financing. Data from the People’s Bank of China shows that as China consolidates its position as the world’s largest exporter, the share of Renminbi in global trade financing has increased from 2% to about 7% over the past five years.

The Chinese central bank has also explicitly stated that it will further encourage offshore entities to finance in Renminbi, emphasizing its lower borrowing costs compared to the dollar, making it attractive to emerging markets. For African countries, this arrangement not only reduces financing costs but also helps diversify reliance on the dollar.

(Challenging the US dollar settlement status, digital Renminbi transaction volume exceeds 2.3 trillion, dominating the mBridge multi-central bank project)

Real Limitations of De-dollarization: Renminbi Still Not Fully Free

Although the visibility of Renminbi in Africa continues to increase, its global status still faces significant limitations. According to IMF data, in Q3 2025, the share of Renminbi in global foreign exchange reserves dropped to 1.93%; the share of Renminbi payments via SWIFT also fell nearly 3% from its 2024 peak.

Kean Fan Lim, from the School of Geography, Politics, and Sociology at Newcastle University, points out that a key factor is that China still maintains capital controls: “Renminbi has not yet achieved full free convertibility, which makes it primarily a ‘trade currency’ rather than a ‘reserve currency’ for most holders.”

As the US dollar’s dominance wavers, currency diversification becomes a political and economic option

In recent years, with the US frequently using sanctions and financial tools to influence international relations, some emerging markets are re-evaluating their heavy reliance on the dollar system. A Zambia government advisor bluntly states, “The higher the demand for the dollar, the greater the exchange rate risk a country bears.”

In this context, Renminbi may not fully replace the dollar but is becoming a “viable alternative.” For China, Africa’s weaknesses in debt pressure and exchange rate risks provide a flexible stage for Renminbi development.

This article, From Tax Revenue to Debt: How China Consolidates Renminbi Influence in Africa While Weakening the Dollar, originally appeared in Chain News ABMedia.