China has been very open about its de-dollarization agenda. While the BRICS bloc of nations has expressed a desire to move away from a US dollar-based global system, none has been more steadfast than China. The nation has been pushing to make the yuan a global currency. The Chinese Communist Party (CCP) has even achieved substantial success for its efforts.
China’s De-Dollarization Initiatives Taking Hold
China’s strategic movements have stealthily placed the yuan as a competitor to the US dollar in global trade. China’s de-dollarization initiatives have substantially put a question mark on the US dollar’s dominance. The yuan has seen a significant increase in global trade settlements over the last decade. The figure is only expected to rise over the coming years.
Earlier this year, it was revealed that China has signed 40 currency swap agreements with foreign banks. The move further sheds light on how fast the country is moving away from the US dollar.
Saudi Arabia is also considering accepting the yuan for oil trade. Saudi Arabia agreeing to use the Chinese yuan for oil deals may cause a considerable blow to the US dollar’s position. The petro-dollar era may come to an end under such conditions. India has also pushed for rupee-based oil deals with Saudi Arabia.
Another significant factor in China’s growing influence is its Belt and Road Initiative. The project aims to promote yuan-based trade across Asia and Africa. These projects may further empower de-dollarization ideologies. China has already strategically placed itself in the developing world. The country’s debt-trap technique of luring nations into its fold has proven quite successful for the CCP.
Sanctions And Tariffs To Further Pull The Greenback?
Western sanctions and President Tariffs may further hinder the US dollar’s growth. Sanctioned nations, like Russia and Iran, have moved to other currencies for trade. Russia and China began trading in yuan after the former invaded Ukraine. Sanctions have played a substantial role in strengthening the yuan’s position.
President Trump went on a tariff spree after his victory. The tariffs were frowned upon by most trade partners. Although many nations have come to terms with new trade deals, the move left a sour taste among many.
While the yuan remains the fastest-growing currency for global settlements, some nations have called for local currencies for mutual trade. Brazil and South Africa have pushed for a BRICS currency for international trade. India, despite being a BRICS member, has said that it does not aim to disrupt the US dollar-based system.
Also Read: De-Dollarization: Which Currency Will Replace the US Dollar?
Cryptocurrencies are another front that the US dollar must face. In a 2025 letter to shareholders, BlackRock CEO Larry Fink said that the US dollar may not remain the global reserve currency forever. He believes digital currencies like Bitcoin (BTC) could replace the dollar’s position as the global reserve currency.
US Dollar Can Still Survive
There is no denying the threat the US dollar has faced over the last 20 years. The greenback has lost substantial lustre in recent times. Despite the downtrend, the dollar will most likely remain the top player for the foreseeable future. The dollar still accounts for a majority of global trade settlements. The dollar also makes up for most of the global reserves.
The US-dollar-based global trade system is a well-oiled machine. It will take decades, if not more, for an alternative currency to take its place. The dollar also enjoys substantial liquidity and flexibility that other currencies cannot replicate.
The US also boasts the world’s mightiest military and economic strength. Pushing the US dollar aside will have substantial consequences.
While the dollar could see its eventual demise, it may not happen anytime soon.