China’s plans for yuan unfazed by Trump’s pledge to protect ‘mighty US dollar’

Though Donald Trump has warned against attempts to undermine the US dollar, China is unlikely to change course on yuan internationalisation

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China’s efforts to expand the overseas use of its currency are likely to see heightened resistance during Donald Trump’s second term as US president. Photo: TNS

Published: 8:30pm, 2 Dec 2024

China may need to exercise caution when promoting the overseas use of the yuan over the next four years, analysts said, as US president-elect Donald Trump appears poised to make the preservation of the status of the US dollar a top priority in his second term.

But given the yuan’s current share of international payments, foreign exchange reserves and commodity pricing – none of which befit China’s status as producer of 17 per cent of global economic output, they argued – US policy will do little to deter Beijing’s long-term plans for the internationalisation of its currency.

In an unsparing social media post on Sunday, Trump vowed to impose 100 per cent tariffs on the Brics bloc of emerging economies – a group which counts China, Brazil, India, Russia and South Africa as its most prominent members – should they attempt to undercut the greenback through the creation of a new common banknote.

His fierce defence of the “mighty US dollar” was viewed as a preview for how his administration will attempt to maintain the currency’s status as the global reserve.

But Zhu Feng, dean of the Institute of International Relations at Nanjing University, said the use of local currencies among developing nations is unrelated to any broad de-dollarisation campaign.

“The use of yuan and local currencies to settle among Brics countries is for trade facilitation and has little impact on the [US] dollar’s unrivalled dominance,” he said. “Beijing should send a clear message to Washington.”