China is aggressively pushing the Chinese yuan for bilateral trade to dethrone the US dollar in global trade. It kick-started the motive after the Russian invasion of Ukraine and is pursuing the de-dollarization agenda for several trade policies. The Chinese yuan currently accounts for 3% of the global reserves after pushing it for bilateral trade. On the contrary, the US dollar foreign exchange reserves stand at 57.80%, according to the latest US dollar data from the International Monetary Fund (IMF).
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China Cannot Dethrone the US Dollar, Says Analyst
Analyst Zongyuan Zoe Liu, a senior at the Council on Foreign Relations (CFR), explained that China cannot dethrone the dollar. She stressed that Chinese policymakers are wary of the situation, as lessons from previous currencies that tried to challenge the USD failed. The Chinese yuan will meet the same fate as internationalizing a currency needs to meet various parameters, which China lacks.
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“China does not have the intention or the capacity to dethrone the dollar,” CFR’s Zongyuan Zoe Liu bluntly put it across to the Council on Foreign Relations (CFR). In addition, the Chinese yuan needs to gain trust to survive and thrive in the currency market, which it lacks. Several Western countries are wary of the yuan and the danger it brings to their economies. Promoting or using the currency helps to bolster the Communist country’s GDP, giving it power to dictate trade policies.
Not just Western countries, even nations from Asia and the Global South are skeptical of the yuan. Its neighboring country, India, is distancing itself from the yuan as it clearly knows that China’s agenda is to dethrone the dollar. India wants the dollar as the country hosts the largest IT sector outsourced from the US. Since nobody trusts or wants the Chinese yuan, China’s dream of dethroning the dollar will never turn into reality.