The long-standing view that a currency cannot become globally important without full convertibility and a fully liberalized capital account is increasingly being challenged, with economists arguing that the renminbi may prove otherwise.

They said that geopolitical tensions are making financial markets less central to currency internationalization, while trade, investment and other real-economy linkages are likely to play a bigger role, creating fresh opportunities for the Chinese yuan to expand its global role and even surpass the euro over time.

Peng Wensheng, chief economist at China International Capital Corp, said the increasing use of financial sanctions by the United States amid geopolitical tensions could prompt more economies to adopt some form of capital account control or management in response.

Such a rise in capital flow restrictions may reduce countries' reliance on financial assets as universal stores of purchasing power, prompting them to place greater weight on real-economy assets, Peng said at a recent seminar held by the Tsinghua University PBC School of Finance.

"That is China's advantage — China has the world's largest manufacturing system, and is the world's largest (goods) trading nation," Peng said, adding that these strengths could increasingly underpin the RMB's internationalization through trade, investment and other real-economy linkages and intergovernmental cooperation.

Financial market opening, meanwhile, should remain an important part of the process rather than the sole driving force of the yuan's global use, he added.

In an exclusive interview with China Daily, Zhu Min, former deputy managing director of the International Monetary Fund, also pushed back against the assumption that the RMB cannot become a major international currency without full convertibility and a fully liberalized capital account — which allows capital to move totally freely across borders.

"We need to correct this old mindset," Zhu said, pointing to the IMF's Special Drawing Rights basket, a collection of major international currencies that gives the RMB a 12.28 percent weighting after the dollar and the euro, as proof that such constraints are not necessarily insurmountable.

"There is still plenty of room to expand RMB settlement in China's trade," Zhu said.

"China imports a large volume of commodities, creating significant scope for settling those purchases in the RMB and pricing commodities in the currency."

Data from the People's Bank of China, the country's central bank, showed that the amount of cross-border RMB settlement under China's current account — covering goods and services trade — came in at 1.67 trillion yuan ($245.8 billion) in May, up from 1.31 trillion yuan a year ago.

The proportion of cross-border RMB receipts and payments under the capital account has risen to around 60 percent, according to the PBOC.

Lu Ting, chief China economist at Nomura, said the Chinese yuan would eventually surpass the euro to become the world's second most important international currency, driven by real-economy linkages.

Unlike the Japanese yen, whose internationalization after Japan fully liberalized its capital account in the 1990s relied increasingly on international financial markets and carry trades — a form of cross-border financial arbitrage — the RMB is more likely to gain wider international use through trade and the global expansion of Chinese companies, Lu said.

"I believe the RMB will one day overtake the euro. It could happen in the next 10 or 20 years, provided China continues moving forward steadily," he said, adding that China should continue opening up its financial markets and providing sufficient RMB liquidity to overseas market participants.

Overseas institutions and individuals now hold more than 10 trillion yuan of onshore RMB financial assets, with PBOC Governor Pan Gongsheng vowing to further enhance the internationalization level of China's financial markets in June.