China is taking advantage of a period marked by global instability to advance its long-held goal of giving its currency a broader international presence, as market turmoil, a softer US dollar, and shifting political landscapes have created what Beijing views as exceptionally ripe conditions.
In recent months, global markets have been unsettled by a convergence of political and economic factors, many of them tied to policy signals coming out of the United States. The renewed presidency of Donald Trump has reintroduced an element of unpredictability into trade, monetary policy, and international relations. As investors attempt to price in this uncertainty, the US dollar has fallen to levels not seen in several years, while traditional safe-haven assets such as gold have surged to record highs.
This environment has opened a window for China to advance a goal it has pursued for more than a decade: increasing the global relevance of the renminbi. The effort is not framed as an outright attempt to displace the dollar, which remains deeply embedded in global finance, but rather as a strategic push to reduce dependence on a single dominant currency and expand China’s influence in international trade and capital markets.
Over the weekend, this intention became unmistakable when Qiushi, the flagship ideological journal of the Chinese Communist Party, released remarks attributed to President Xi Jinping, in which Xi sketched out plans to elevate the renminbi into a currency with far greater international reach, one that could be broadly adopted in global trade and foreign exchange markets, and these comments, first delivered privately in 2024, were made public as Beijing seeks to present itself as a steady and trustworthy economic partner during a period of global volatility.
A moment shaped by dollar uncertainty
The timing of China’s renewed messaging has been closely linked to recent shifts in the US dollar, especially after Trump returned to office, when a wave of policy moves and signals began to unsettle investors. Tariffs imposed on key trade partners, together with the prospect of additional protectionist actions, have intensified worries about US economic growth and inflation. Meanwhile, escalating frictions between the White House and the Federal Reserve have stirred uncertainty over the future course of US monetary policy.
Trump’s nomination of Kevin Warsh to lead the Federal Reserve, following repeated clashes with current chair Jerome Powell, has amplified fears of political interference in central banking. For global investors, the perception of an independent and predictable Federal Reserve has long been a cornerstone of confidence in the dollar. Any erosion of that perception carries consequences beyond US borders.
As a result, some investors have begun to diversify away from dollar-denominated assets. This shift is not dramatic enough to threaten the dollar’s central role, but it has contributed to a broader conversation about diversification and risk management. European Central Bank President Christine Lagarde has publicly suggested that the euro could assume a larger role in global finance, reflecting a wider interest among policymakers in reducing overreliance on the US currency.
Against this backdrop, China sees what analysts describe as a rare opening. For years, Beijing has struggled to persuade foreign governments and financial institutions to hold and use renminbi at scale. Now, with confidence in US economic leadership showing signs of strain, Chinese policymakers believe conditions are more favorable for incremental gains.
Why reserve currency status matters
To understand the significance of China’s ambitions, it is important to grasp why reserve currency status is so valuable. Since the end of World War II and the establishment of the Bretton Woods system, the US dollar has occupied a central position in the global economy. Even after the collapse of the gold standard, the dollar retained its dominance due to the size of the US economy, the depth of its financial markets, and the credibility of its institutions.
This status confers tangible advantages. Strong global demand for dollars allows the United States to borrow at lower costs and run persistent trade deficits without triggering immediate financial crises. It also gives Washington powerful tools in the form of financial sanctions, which rely on the centrality of the dollar-based payment system.
The International Monetary Fund currently recognizes several reserve currencies, including the euro, Japanese yen, British pound, Swiss franc, and the renminbi. However, the scale of their use varies widely. The dollar still accounts for well over half of global foreign exchange reserves, while the renminbi represents only a small fraction.
For China, expanding the international use of its currency goes beyond simple prestige, serving instead as a strategy to lessen its exposure to US financial leverage in situations such as sanctions or trade conflicts, while also strengthening Beijing’s capacity to shape global pricing, steer investment movements, and impact the frameworks that regulate international finance.
Measures China has implemented to advance the renminbi’s global use
China’s drive to broaden the international role of the renminbi did not originate with the recent spell of dollar softness, as Beijing has spent the past decade rolling out reforms aimed at making its currency easier for global users to adopt and more attractive overall. These measures have ranged from widening foreign investor access to Chinese bond and equity markets to opening the door to broader involvement in commodity trading and upgrading systems that support cross‑border payments.
One significant shift has been the growth of the Cross-Border Interbank Payment System, or CIPS, offering a substitute for financial messaging frameworks largely shaped by Western institutions, and although CIPS remains much smaller than the SWIFT network, it advances Beijing’s wider objective of establishing parallel financial routes that lessen dependence on systems controlled by the US and Europe.
Trade relationships have also played a critical role. China’s growing economic ties with developing countries have increased opportunities for settling transactions in renminbi. This trend accelerated after Western sanctions on Russia following its invasion of Ukraine. As one of Russia’s largest trading partners, China conducted a significant share of bilateral trade using its own currency, pushing renminbi-denominated settlements to record levels.
Chinese officials have pointed to these developments as indicators of advancement, noting that last year the governor of the People’s Bank of China announced that the renminbi had emerged as the world’s leading trade finance currency and the third most frequently used payment currency worldwide, presenting this shift as part of a broader transition toward a “multipolar” currency landscape where no single currency maintains overwhelming supremacy.
De-dollarization and global reactions
The concept of “de-dollarization” has gained traction in recent years, though its meaning is often overstated. In practice, it refers to efforts by some countries to reduce their exposure to the dollar, rather than a coordinated attempt to replace it. These efforts range from settling bilateral trade in local currencies to increasing gold reserves and exploring alternative payment mechanisms.
For nations confronted by US sanctions or anxious about potential future limits, lowering dependence on the dollar is viewed as a protective measure, while China has increasingly presented the renminbi as a workable alternative, especially for countries already strongly tied to its trade networks.
At the same time, these discussions have drawn sharp reactions from Washington. Trump has openly criticized proposals by the BRICS bloc to explore alternative reserve currencies, warning of severe trade retaliation if such plans were pursued. These statements underscore how closely currency dominance is tied to geopolitical power.
Despite the rhetoric, most analysts agree that de-dollarization is likely to be gradual and limited. The dollar’s entrenched role in global finance, supported by deep and liquid markets, is not easily replicated. However, even small shifts can have meaningful implications over time, particularly if they reduce the United States’ ability to wield financial influence unilaterally.
The limits of China’s ambitions
Although Beijing sees the current climate as a potential opening, significant limits remain on how much the renminbi can genuinely advance. IMF data indicates that the currency represents only a minor portion of global reserves, trailing well behind both the dollar and the euro. Narrowing that distance would demand structural reforms that China has so far been unwilling to undertake.
One of the most significant obstacles is capital controls. China tightly regulates the movement of money in and out of the country, a policy designed to maintain financial stability and control over its exchange rate. While these controls offer domestic benefits, they make the renminbi less attractive as a reserve asset, since investors value the ability to move funds freely and predictably.
Beijing also faces challenges in managing its exchange rate, as it has traditionally maintained a comparatively weak renminbi to bolster its export‑oriented economy, yet a genuine global reserve currency generally demands greater transparency and pricing driven by market forces, potentially restricting the government’s capacity to intervene.
Experts note that China’s leadership appears aware of these trade-offs. Rather than seeking to replace the dollar outright, Beijing’s strategy seems focused on incremental gains: increasing usage in trade settlements, expanding bilateral currency agreements, and positioning the renminbi as one option among several in a more diversified global system.
A calculated shift, rather than a radical overhaul
From Beijing’s perspective, the current moment is less about overturning the existing financial order and more about exploiting favorable conditions to advance long-term goals. Disillusionment with US economic policy, combined with geopolitical fragmentation, has created space for alternatives to gain traction, even if only at the margins.
Analysts caution against interpreting China’s ambitions as an imminent threat to dollar dominance. The structural advantages underpinning the dollar remain formidable, and no other currency currently offers the same combination of scale, liquidity, and institutional trust. Even so, the gradual expansion of the renminbi’s role could reshape certain aspects of global finance, particularly in regions where China’s economic influence is strongest.
In this sense, the renminbi’s rise is best understood as part of a broader rebalancing rather than a zero-sum contest. As global power becomes more diffuse, financial systems may evolve to reflect a wider range of currencies and institutions. China’s efforts are aligned with this trend, even if their ultimate impact remains uncertain.
The weakening of the dollar has not dethroned it, but it has exposed vulnerabilities and sparked debate about alternatives. For China, that debate represents an opportunity to push its currency further onto the world stage. Whether this moment leads to lasting change will depend not only on external conditions, but on Beijing’s willingness to undertake reforms that inspire trust beyond its borders.
What is clear is that the conversation around global currencies is shifting. In a world marked by geopolitical rivalry and economic uncertainty, the dominance of any single currency can no longer be taken for granted. China’s push for the renminbi is one expression of that reality, reflecting both ambition and caution in equal measure.
