China is using the current global economic uncertainty to try to reduce the influence of the US dollar and strengthen its international position.
Geopolitical tension, caused in part by the policies of President Donald Trump, has sent the dollar falling to a four-year low in recent weeks as investors sought safe havens and pushed the price of gold to record highs.
This decline has opened up space for China to promote the renminbi (yuan) as a potential alternative to the dollar in international trade. According to the Communist Party of China’s ideological journal Qiushi, President Xi Jinping advised party officials that China should strive to create a “strong currency that would be widely used in international trade and foreign exchange transactions,” with a “strong central bank” capable of attracting investment and influencing global prices.
China has been trying to integrate the renminbi into international financial flows for more than a decade, but interest has grown in recent years due to “de-dollarization” and reduced confidence in the US economy. Trump’s tariff policy and the change in the leadership of the Federal Reserve have added to the uncertainty surrounding US monetary policy, which has opened an opportunity for China to promote its currency.
By taking measures such as easier access to Chinese stocks and bonds, simplified cross-border payments and strengthening trade ties with developing countries, the renminbi has become more attractive to investors. The use of the renminbi in trade settlements has reached record levels, especially after Western countries imposed sanctions on Russia, while China remained one of Moscow’s main partners.
However, the renminbi is not yet a serious threat to the dollar. According to IMF data, the dollar accounts for about 57% of the world’s foreign exchange reserves, the euro for 20%, while the renminbi accounts for only about 2%. Tight controls on capital movements in China and a focus on maintaining a competitive export economy limit the possibility that the renminbi will replace the dollar as the main global reserve currency any time soon.
Analysts point out that China does not plan to immediately replace the dollar, but strategically uses the moment of dissatisfaction with American policy and uncertainty in the markets to increase the role of the renminbi and strengthen its influence in the global economy. “Beijing sees an opportunity to seize the moment and strengthen its currency in international trade, even if the renminbi is not yet a serious competitor to the dollar,” said Dinny McMahon, an expert on the Chinese market.
