- China is increasing efforts to promote the yuan over the U.S. dollar in global trade.
- Cross-border transactions in yuan now account for 30% of China’s trade in 2024, up from less than 2% ten years ago.
- Major oil and energy deals with Russia and Iran are settled in yuan instead of U.S. dollars.
- The U.S. dollar remains dominant, making up 58% of global foreign exchange reserves and used in over 80% of global trade settlements.
- China has introduced payment systems and disbursed Belt and Road Initiative loans in yuan to bolster its international use.
China is working to reduce its reliance on the U.S. dollar in international trade by pushing for the wider use of the yuan. Over the past two years, Chinese officials have made agreements that place the yuan at the center of cross-border transactions. These efforts aim to shift developing nations away from the U.S. dollar and raise the profile of the yuan globally.
Recent data shows that in 2024, 30% of China’s trade is settled in yuan, which is a significant increase from less than 2% a decade ago. Major oil and energy purchases, such as those from Russia and Iran, are now paid for in yuan. China has also distributed several Belt and Road Initiative loans in yuan, requiring transaction partners to use the Chinese currency.
The development of the Cross-Border Interbank Payment System (CIPS), which is a yuan-based alternative to the Western-backed SWIFT network, is a key part of China’s strategy. This system is designed to support more transactions in the yuan and reduce dependence on western financial infrastructure.
Despite these advancements, the U.S. dollar remains the dominant global currency. According to the article, the dollar still accounts for 58% of all global foreign exchange reserves, while the yuan makes up just 3%. Additionally, over 80% of worldwide trade is settled in dollars, and the currency continues to be seen as a safer reserve compared to the yuan.
While China has achieved growth in yuan-based transactions and established alternatives to traditional payment systems, the article concludes that China has not succeeded in unseating the U.S. dollar. The greenback remains the preferred choice for global reserves and most international settlements. China’s progress is notable, but the yuan still has a long way to go before it can challenge the dollar’s leading status.
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