China is seizing a moment of worldwide volatility to push forward its longstanding ambition of expanding the international reach of its currency, as financial upheaval, a weakening US dollar, and evolving political dynamics have produced conditions Beijing considers unusually favorable.
In recent months, global markets have been unsettled by a mix of political and economic pressures, many tied to policy signals coming from the United States, where the renewed presidency of Donald Trump has introduced fresh unpredictability in trade, monetary policy, and international relations, prompting investors to adjust to evolving circumstances as the US dollar sinks to its lowest point in years and traditional safe-haven assets such as gold surge to record-breaking levels.
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 ambition was made explicit when Qiushi, the flagship ideological journal of the Chinese Communist Party, published remarks attributed to President Xi Jinping. In those comments, Xi outlined a vision for transforming the renminbi into a currency with a much stronger international footprint, capable of being widely used in global trade and foreign exchange markets. The statements, originally delivered privately in 2024, were released publicly at a time when Beijing appears eager to present itself as a stable and reliable economic partner amid global turbulence.
A period defined by the dollar’s unpredictable trajectory
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 move to put Kevin Warsh forward to lead the Federal Reserve, following ongoing clashes with current chair Jerome Powell, has heightened worries about political interference in the central bank’s operations, and for global investors, the perception of the Federal Reserve as a stable, independent body has long supported confidence in the dollar, meaning that any erosion of that belief could trigger consequences well beyond the US.
As a result, a number of investors have started steering their portfolios toward alternatives to dollar‑denominated holdings, and although this movement is not substantial enough to endanger the dollar’s dominant status, it has helped spark broader discussions about diversification and risk control; European Central Bank President Christine Lagarde has also stated publicly that the euro might take on a more prominent global financial role, underscoring a growing interest among policymakers in curbing excessive dependence on the US currency.
Against this backdrop, China views what numerous analysts describe as a rare moment of opportunity. For years, Beijing has struggled to persuade foreign governments and financial institutions to widely embrace and use the renminbi. Today, with confidence in US economic management seemingly diminishing, Chinese policymakers regard the climate as more favorable for steady advancement.
Why the role of a reserve currency is important
Since grasping the weight of China’s ambitions requires understanding the value of reserve currency status, it becomes crucial to see why such a designation matters. From the end of World War II and the creation of the Bretton Woods framework onward, the US dollar has held a pivotal role in the global economy. Even after the gold standard fell, the dollar continued to dominate, supported by the scale of the US economy, the strength of its financial markets, and the longstanding trust in 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, although each plays a markedly different role worldwide. The dollar still represents a large portion of global foreign exchange reserves, while the renminbi holds only a relatively small position.
For China, broadening the global adoption of its currency is not merely a matter of prestige but a tactic aimed at reducing its vulnerability to US financial pressure in contexts like sanctions or trade disputes, while simultaneously enhancing Beijing’s ability to influence worldwide pricing, guide investment flows, and shape the systems that govern international finance.
Measures China has implemented to advance the renminbi’s global use
China’s push to internationalize the renminbi did not begin with the current bout of dollar weakness. Over the past decade, Beijing has steadily introduced reforms designed to make its currency more accessible and appealing to foreign users. These efforts include expanding foreign access to Chinese bond and equity markets, allowing greater participation in commodity trading, and improving cross-border payment infrastructure.
One notable development has been the rise of the Cross-Border Interbank Payment System, or CIPS, which serves as an alternative to financial messaging structures long dominated by Western institutions, and while CIPS is still far smaller than the SWIFT network, it continues to support Beijing’s broader aim of building parallel financial channels that reduce reliance on systems overseen by the US and Europe.
China’s growing commercial ties with developing countries have also played a crucial role, extending the renminbi’s use in cross-border payments, a trend that accelerated after Western sanctions were imposed on Russia following its invasion of Ukraine; as one of Russia’s key trading partners, China conducted a large share of their bilateral commerce in its own currency, pushing renminbi-denominated transactions to record levels.
Chinese officials have cited these developments as signs of progress, highlighting that the governor of the People’s Bank of China stated last year that the renminbi had become the world’s top trade finance currency and the third most widely used payment currency, framing this change as part of a broader shift toward a multipolar monetary system in which no single currency holds dominant authority.
Shifts Beyond the Dollar 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 countries that have faced US sanctions or fear future restrictions, reducing reliance on the dollar is seen as a form of insurance. China has positioned the renminbi as a practical option in this context, particularly for nations already deeply integrated into its trade networks.
At the same time, these discussions have triggered firm resistance from Washington. Trump has openly criticized moves by the BRICS bloc to explore alternative reserve currencies, warning that significant trade retaliation could arise if those plans progressed. His statements underscore how tightly currency dominance is linked to geopolitical power.
Although the rhetoric is strong, most analysts contend that any move away from the dollar will unfold slowly and remain limited. The dollar’s firmly established position in global finance, backed by extensive and highly liquid markets, cannot be easily reproduced. Still, even modest adjustments could carry significant long‑term effects, especially if they diminish the United States’ capacity to exercise financial influence on its own.
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 main challenges stems from capital controls, since China enforces stringent supervision over money moving into or out of the country to safeguard financial stability and regulate its exchange rate; while these controls offer domestic benefits, they diminish the renminbi’s attractiveness as a reserve currency because investors give priority to moving funds freely and with reliable consistency.
Beijing continues to grapple with exchange rate management, since it has long kept the renminbi relatively weak to support its export‑focused economy, although a true global reserve currency typically requires more openness and market‑driven valuation, which could limit the government’s ability to step in.
Experts observe that China’s leadership seems conscious of these trade-offs, and instead of trying to fully supplant the dollar, Beijing appears to pursue gradual progress by boosting its role in trade settlements, enlarging bilateral currency arrangements, and positioning the renminbi as one of several choices within 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 immediate threat to the dollar’s prevailing dominance. The dollar still benefits from deeply rooted structural advantages, and no other currency currently replicates its combination of scale, liquidity, and institutional trust. Even so, the renminbi’s gradual ascent may, over time, shape specific segments of global finance, particularly within regions most influenced by China’s expanding economic presence.
In this sense, the rise of the renminbi can be viewed less as a zero-sum struggle and more as a component of a broader global adjustment, as increasingly dispersed power encourages financial systems to adapt to a more diverse set of currencies and institutions, with China’s initiatives fitting into this trajectory even though their long-term effects remain unclear.
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.
The evolving conversation around global currencies has become increasingly clear, and in a world marked by geopolitical friction and financial instability, the dominance of any one currency can no longer be taken for granted; China’s push to advance the renminbi underscores this shift, combining strategic ambition with cautious moderation.
