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 rattled by a blend of political and economic forces, many linked to policy signals emerging from the United States. The renewed presidency of Donald Trump has injected fresh uncertainty into trade, monetary strategy, and international diplomacy. As investors attempt to account for these shifting conditions, the US dollar has slid to its weakest levels in years, while classic safe-haven assets like gold have climbed to unprecedented 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, published remarks attributed to President Xi Jinping, in which Xi outlined plans for raising the renminbi into a currency with much broader international influence, one that might be widely used in global trade and foreign exchange markets, and these comments, originally shared privately in 2024, were disclosed publicly as Beijing aims to portray itself as a reliable and stable economic partner amid a period of global turbulence.
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, many investors have begun redirecting their portfolios toward options beyond dollar‑denominated assets, and while this shift remains too limited to threaten the dollar’s prevailing dominance, it has nevertheless fueled wider conversations about diversification and risk management; European Central Bank President Christine Lagarde has likewise affirmed publicly that the euro could assume a more influential role in global finance, highlighting policymakers’ rising interest in reducing excessive reliance 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 the function of a reserve currency 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 yields tangible advantages, since the powerful global appetite for dollars allows the United States to access lower‑cost financing and sustain persistent trade deficits without triggering sudden financial instability, while also giving Washington considerable influence through financial sanctions that rely on the predominance 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.
Steps China has taken to promote the renminbi
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.
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.
Shifts Beyond the Dollar and Global Reactions
The notion of de-dollarization has captured notable interest in recent years, although its significance is often exaggerated; in practice, it refers to how some countries aim to curb their dependence on the dollar rather than coordinate a collective effort to replace it, employing measures that range from settling bilateral transactions in domestic currencies to reinforcing gold holdings and exploring alternative payment frameworks.
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 debates have sparked strong pushback from Washington. Trump has publicly condemned initiatives by the BRICS bloc to investigate alternative reserve currencies, cautioning that serious trade reprisals could follow if such efforts advanced. These remarks highlight the deep connection between currency supremacy and geopolitical influence.
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 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.
There is also the issue of exchange rate management. Beijing has historically favored a relatively weaker renminbi to support its export-driven economy. A truly global reserve currency, however, typically requires a high degree of transparency and market-determined pricing, which could limit the government’s ability to intervene.
Experts note that China’s leadership appears aware of these compromises, and rather than attempting to completely replace the dollar, Beijing seems to favor a measured approach by expanding its use in trade settlements, broadening bilateral currency agreements, and presenting the renminbi as one option among several within a more diversified global framework.
A measured transition rather than a sweeping transformation
From Beijing’s perspective, this moment is driven less by any intention to dismantle the existing financial order and more by an effort to seize a favorable opening to advance its long-term goals, as frustration with US economic policy and escalating geopolitical fragmentation have created a narrow yet significant space for alternative strategies to take shape.
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.
Viewed this way, the ascent of the renminbi appears less like a zero-sum contest and more like part of a wider global rebalancing, as increasingly distributed power pushes financial systems to adjust to a richer mix of currencies and institutions, with China’s efforts aligning with this shift even though their lasting implications are still 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.
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.
