Growing tensions between the US and China has exacerbated worries of an all-out trade war between the world's largest economies, but it could also lead to a good thing: the acceleration of the yuan's globalization.

Despite the inclusion of the renminbi in IMF's global reserve asset special drawing rights in 2016, the internationalization of the renminbi has been "slow so far", says Noritaka Akamatsu, senior advisor for Financial Cooperation & Integration at Asian Development Bank, during The Asset 12th Asian Bond Market Summit in Shanghai.

"The cautious attitude of the Chinese authorities till now was only wise. But going forward, the trade tension with the US may provide a good opportunity as well as challenges to accelerate the internationalization," he adds.

China is evaluating the potential impact on the renminbi as it weighs its options in a trade spat with US President Donald Trump. As it uses the currency as a tool in trade negotiations with the US, the liberalization of the renminbi could be one of the considerations.

"We at ADB are also paying close attention to the internationalization of the renminbi, particularly at this very time of trade tension," says Akamatsu.

The renminbi is already included in special drawing right, an international reserve asset with the IMF, but the globalization has been slow since its inclusion two years ago. Akamatsu, however, believes the way forward would be to closely monitor the globalization of the renminbi.

Akamatsu says the local currency bond market will play an important role in the development of Asian economies. In China, it is expected to play a key role in funding the Belt and Road projects, an infrastructure programme designed to connect the countries along Silk Road.

"Bond Connect, Panda bonds and credit rating internationalization and Regulation S are all key to internationalizing renminbi as well as financing Belt and Road projects," he adds.

China is the dominant bond market among the Asean +2 nations, which includes the 10 nations in Southeast Asia with China and Korea. The outstanding volume is US$9 trillion, which is over 70% of the region's total, he notes.

Across the region as well as within China, government bonds represent about two-thirds of the total outstanding volume of bonds.

"I personally call this "2/3 rules". It's not a formal name of the market structure but an easy way to remember how the region's bond market is shaped," says Akamatsu.