China is looking to overtake the U.S. in yet another front on the world stage, but it may be an uphill battle. The Chinese yuan is growing in use on the global currency market, with the yuan more than doubling its share of global trade finance since 2021. So far, most of that growth has been in countries like Argentina and Brazil, where struggling economies prompted leaders to begin doing business with China directly in yuan.
This is yet another part of China's push to usurp the U.S. "China would certainly want the yuan to replace the U.S. dollar as the world's currency," says Gordon Chang, author and China expert. "And it is making some progress, especially for countries that want to buy Chinese goods, Beijing is coercing them into using the Chinese currency."
While Chinese currency is gaining more widespread use around the world, it remains a small fraction of the dollar, which remains the world's top currency. Beyond that, China's bold aspirations for the yuan have a major problem. "The Chinese currency right now is extremely weak," says Chang. "In fact, it just broke the 7-to-1 barrier...that is, 7 yuan to equal 1 U.S. dollar."
The dollar isn't exactly doing gangbusters itself these days, thanks to our own sputtering economy and economic policies. Chang says ultimately we will decide how far China's currency ambitions will go. "There's only one country that can dethrone the dollar, and that's the United States," he tells KTRH. "But we seem to be doing a good job of that with wild spending and inflation, and that certainly undermines confidence in the dollar."
The U.S. has also driven some nations into doing more business with China through our own punitive economic policy and sanctions. "What is important for the U.S. is to develop policies to protect the dollar, and policies to protect our friends, because that will make them far less likely to accept the yuan for currency transactions," says Chang.
Photo: Moment RF