An employee holds a 100-yuan note at a bank in Hangzhou, capital of East China's Zhejiang Province. File photo: VCG

The China-US trade war may help promote the internationalization of the yuan as the Chinese currency seeks a global footprint, analysts said on Tuesday.The comments came amid the ongoing trade talks between China and the US, which is demanding that China does not devalue its currency.The yuan's internationalization drive is entering its fifth year, with more countries and regions recognizing it as a settlement currency.Although not usually discussed together, the trade war and yuan globalization do indeed have some connections.For instance, Steve Bannon, former chief strategic advisor to US President Donald Trump, warned at a conference in Tokyo in 2017 that the yuan could threaten to displace the US dollar's status as the global reserve currency. Bannon was reportedly behind some of the confrontational approaches to China, including the trade war.Zhou Yu, director of the Research Center of International Finance at the Shanghai Academy of Social Sciences, told the Global Times on Tuesday that trade disputes between China and the US will be helpful for enhancing the yuan's internationalization as countries shift from the US currency to the yuan and other currencies out of a feeling of insecurity."Now many countries are fearing that the Trump government might freeze their assets because of the changeable policies and trade protectionism adopted by Trump. To ease such risks, many countries, such as Russia, are already dumping the US dollar and increasing holdings of other currencies. For this, the yuan is a good option," he said.More than 60 central banks or monetary authorities have included the Chinese currency in their foreign exchange reserves. According to Zhou, the fact that China's efforts to promote international trade is also encouraging many countries to make trade settlements in yuan, which helps drive the currency's internationalization.According to a SWIFT report, the yuan's share in global payments stood at 1.7 percent in October, the sixth most-traded currency.Another important factor promoting the yuan's internationalization is keeping a stable exchange rate, which has also had something to do with the China-US trade talks nearing an end, experts said."If the bilateral relationship returns to a stable state, the yuan's exchange rate against the US dollar is also likely to remain stable. As this is a wish shared by both sides (the Chinese government and the US government), I think it's highly probable," Zhou said.Guan Tao, a former director of the international payments department of China's State Administration of Foreign Exchange, said there is some truth to the theory that a stable yuan helps its internationalization drive, although in the long run, a currency's internationalization depends on whether it fluctuates according to market-based mechanisms, rather than interventions.The yuan is still not fully convertible, which makes it stand out among major global currencies listed by the IMF."A mechanism that has no resilience will require administrative invention under extreme circumstances. This situation will harm cross-border movement of capital and it's also bad for a given currency's internationalization drive," Guan told the Global Times.As of the end of 2018, yuan-denominated financial domestic assets held by overseas investors totaled 4.8 trillion yuan, up 1.8 trillion yuan from a low recorded in 2016, media reports said.The People's Bank of China, the central bank, has signed currency swap deals with 38 foreign central banks with a total value of 3.47 trillion yuan, up 309.5 billion yuan from August 2015, media reports showed."Since the second half of 2015, China has been pushing the yuan's internationalization by opening up its domestic financial markets, a marked change from bold pushes at the offshore and overseas markets to its domestic market," noted Guan, who is currently a senior research fellow at China Finance 40 Forum."Now the general opinion is that yuan's internationalization process will be a natural one. Any settlements that can be made in foreign currencies are now free to be settled in the domestic currency. Whether to use it ... that choice is left to the market," Guan said.