China is intensifying its efforts to enhance its global financial position by promoting the renminbi as an alternative to the US dollar, capitalizing on recent geopolitical developments and the dollar’s decline in value. This shift is largely attributed to ongoing uncertainties in US economic policy, particularly since the advent of President Donald Trump’s administration, which has led to a significant drop in dollar value, reaching four-year lows.
Amid this backdrop, investors have increasingly sought refuge in safe-haven assets such as gold, which has seen prices soar to record highs of over $5,500 an ounce. This scenario presents China with a unique opportunity to advocate for its currency’s role on the international stage.
In remarks published by the Communist Party’s flagship journal, President Xi Jinping articulated ambitions for the renminbi to achieve status as a global reserve currency—similar to the current role of the dollar, which is predominantly used in global transactions and considered one of the safest investments. While experts do not foresee an immediate replacement of the dollar, the economic landscape has become more conducive for challengers as the dollar’s depreciation opens avenues for alternative currencies.
According to Qiushi, Xi urged government officials to strive for a “strong currency widely used in international trade and foreign exchange,” supported by a “powerful central bank” capable of attracting investment and influencing global pricing. These remarks, made privately in 2024 and made public in light of China’s strategic repositioning, underscore the nation’s ambitions to be viewed as a stable economic partner compared to the US.
China has spent over ten years working to embed the renminbi in international markets and bolster its stability as a global currency. Recent discontent with US economic strategies has accelerated this endeavor, especially amid the broader movement of “de-dollarization.” Trump’s administration has introduced several rounds of tariffs on key trading partners, casting doubt on the US economic growth and the value of its currency. Additionally, the Federal Reserve’s leadership changes have left monetary policy increasingly uncertain.
As confidence ebbs in the dollar, foreign investors have decreased their exposure, leading figures like Christine Lagarde of the European Central Bank to advocate for a more prominent role for the euro in global finance. This sentiment is echoed by nations seeking to hedge their reliance on the dollar, particularly due to the sanctions and tariffs enforced by the US.
Experts suggest that for the renminbi to gain traction internationally, it needs to carve out a significant niche, which has historically proven challenging. However, analysts, including Dinny McMahon from Trivium China, note that the current climate presents a unique moment for the renminbi, as global disillusionment with the dollar is palpable.
For over 80 years, the dollar has remained central to the global economy, especially since the Bretton Woods Agreement positioned it as the gold-backed standard. The strong demand for the dollar has afforded the US significant influence over international borrowing and the imposition of sanctions. While the International Monetary Fund recognizes various major reserve currencies, the renminbi’s standing remains modest, accounting for approximately 2% of foreign exchange reserves compared to about 57% for the dollar and 20% for the euro.
In efforts to enhance its currency’s appeal, China has implemented measures such as expanding access to local securities and streamlining cross-border payments. Increased trade ties with developing economies have also strengthened the renminbi’s case for use in foreign transactions. Notably, the usage of the renminbi soared following Western sanctions on Russia, highlighting China’s robust trading relationship with the nation.
Despite these advancements, experts caution that stringent controls on capital movement may inhibit foreign investors from heavily relying on the renminbi. Additionally, China might prefer to maintain a lower value for its currency to support its export-driven economy. Analysts remain skeptical about the renminbi achieving the same status as the dollar or euro but recognize that the evolving global financial landscape presents an opportunity for Beijing to assert greater influence.
While a financial system primarily reliant on the renminbi is still far from realization, the Chinese government appears committed to expanding its currency’s role in international finance amid changing geopolitical dynamics.
