In an ever-evolving global economic landscape, analysts have pointed out that China might need to adopt a more cautious approach in promoting the overseas usage of the yuan over the next four years. This comes as US President-elect Donald Trump seems determined to prioritize the preservation of the US dollar's status during his second term. As the yuan currently holds a certain share in international payments, foreign exchange reserves, and commodity pricing, yet fails to fully align with China's significant position as a producer of 17% of global economic output, some argue that US policies will have limited impact on Beijing's long-term plans for the internationalization of its currency.
Trump's Stance on the US Dollar
On Sunday, through an unsparing social media post, Trump made a firm vow to impose 100% tariffs on the BRICS bloc of emerging economies. This bloc includes prominent members such as China, Brazil, India, Russia, and South Africa. If these countries attempt to undermine the US dollar by creating a new common banknote, Trump's aggressive move is seen as a preview of how his administration will strive to maintain the currency's status as the global reserve. His fierce defense of the "mighty US dollar" clearly indicates his determination in this regard.Zhu Feng's Perspective
Dean Zhu Feng from the Institute of International Relations at Nanjing University believes that the use of local currencies among developing nations is not part of a broad de-dollarization campaign. He emphasizes that the use of the yuan and local currencies to settle among BRICS countries is mainly for trade facilitation purposes and has minimal impact on the US dollar's unrivaled dominance. He strongly advises Beijing to send a clear message to Washington, highlighting the significance and independence of China's currency policies.Impact and Future Outlook
Despite Trump's assertive stance on the US dollar, the current situation does not necessarily mean a setback for China's yuan internationalization efforts. China's economic strength and growing global influence continue to provide a solid foundation for the yuan's gradual expansion in international markets. While the US may try to maintain its dominance, the increasing demand for diversified currencies and the evolving trade patterns among different regions will likely lead to a more balanced global currency system in the long run. China will need to carefully navigate these challenges and opportunities, leveraging its economic advantages to further promote the international use of the yuan while also maintaining stable economic development at home.READ MORE