China is accelerating its long-running effort to turn the yuan into a genuine global currency, and recent signals from Washington are strengthening Beijing’s resolve.
For years, Chinese policymakers have worked quietly to expand the yuan’s role in trade, finance and reserves. Progress has been steady but constrained, shaped by capital controls, domestic priorities and the overriding need for stability.
What’s changed is the external environment. Confidence in the dollar’s unquestioned dominance is no longer assumed, and that shift carries strategic significance.
A major catalyst for Beijing’s thinking came after the invasion of Ukraine, when the US and its allies froze Russian state assets and cut off access to parts of the global financial system.
For China, the lesson was stark. Financial integration brings efficiency, but it also creates exposure. Dependence on a system ultimately controlled elsewhere carries risks that extend far beyond economics.
This perspective surfaced with unusual clarity in a speech delivered by Xi Jinping in 2024 and released publicly over the weekend.
Rather than focusing on growth targets or financial stability alone, Xi placed currency strength at the center of national power. He defined it in outward-looking terms: international usage, trade settlement reach, influence in foreign-exchange markets and reserve status.
Such direct language is rare. China has promoted wider yuan usage for years, yet the strategic destination has often been left implicit. The speech removed much of that ambiguity. It framed monetary influence as a core pillar of national strength, alongside industrial and technological capability.
The timing of the speech’s publication is notable. It arrives as US rhetoric around the dollar has grown less orthodox.
Donald Trump has repeatedly argued that a weaker greenback supports domestic manufacturing competitiveness. His recent comments welcoming the dollar’s decline reinforced the impression that currency strength is no longer treated as a policy anchor.
For China, this matters more than any single policy announcement. Currency internationalization depends on relative confidence.
The yuan doesn’t even need to replace the dollar to gain ground. It only needs to become more useful, more accepted and less risky in specific contexts.
Beijing is already laying that groundwork, it seems. Currently, about one-third of the People’s Republic’s goods trade is settled in yuan, reversing earlier stagnation and returning to levels last seen nearly a decade ago.
Bilateral trade agreements, energy transactions and regional payment arrangements have all played a role. Parallel infrastructure has been built quietly, designed to reduce reliance on dollar-centric systems where possible.
At the same time, Chinese authorities remain cautious. Capital controls are still in place, and the central bank continues to prioritize predictability. Stability is not a constraint on ambition; it’s a prerequisite. Volatility undermines trust, and trust is essential for any currency seeking wider adoption.
The broader context is a changing global order. Trade is becoming more politicized, financial systems are increasingly viewed through the lens of security and governments are reassessing where vulnerabilities lie and how leverage can be exercised. In this environment, monetary dependence carries new weight.
There is an irony in how this moment has emerged. Policies framed around economic nationalism in the US may be reducing the very dominance they aim to protect. By signaling tolerance for a weaker dollar, Washington creates space for rivals to test alternatives, even if unintentionally.
China does not need to move quickly to benefit. Time works in its favor. Each incremental increase in yuan usage, each additional trade settled outside the dollar, marginally reshapes behavior. Over time, those marginal shifts accumulate.
The result is not a sudden overthrow of the existing system, but a gradual rebalancing. A world where the dollar remains central, but less singular.
It seems highly likely that this is the opening Beijing now sees. Not a moment of rupture, but one of acceleration.
