Polite refusal: China is leading a smooth de-dollarization
The share of the yuan in China's cross-border transactions exceeded 50% and significantly surpassed the share of the dollar. The growth of China's operations, the world's second largest economy and largest exporter, is significantly accelerating global de-dollarization. Nevertheless, China avoids this term and is still aiming at creating a regional and interregional system based on the yuan. The thing is that the complete globalization of the local currency carries significant risks. Details can be found in the Izvestia article.
SWIFT Replacement
China's desire to reduce dependence on the US dollar first took shape during the global financial crisis of 2008-2009. The Chinese government was frightened by the aggressive issuance of the US Federal Reserve, which threatened the huge assets (almost $2 trillion) accumulated by China in dollars. As a result, in 2009, Beijing launched a pilot scheme for payments in yuan for cross-border trade.
Gradually, this policy began to bear fruit. If in the early 2010s barely 10% of Chinese foreign trade took place in yuan, by 2023 this figure jumped to 30%, if we keep in mind exclusively the purchase and sale of goods and services. If we take into account all cross—border payments, including bond purchases and foreign investments, the share of the yuan reaches 53%. In dollar terms, that's trillions.
Russian Finance Minister Anton Siluanov said this week that Russia and China have almost completely switched to settlements in national currencies: 99.1% of settlements are made in yuan and rubles. He noted that Moscow and Beijing need to maintain the stability of the bilateral financial infrastructure and form new reliable payment channels. In many ways, this is a forced situation: in trade with countries that are not under such pressure from sanctions, the share of the yuan is much lower.
The question may arise here: if China is moving away from mutual settlements in dollars and euros so quickly, why does this have virtually no effect on SWIFT statistics? Indeed, data from the Belgian payment system shows that the share of the yuan has not only not grown in recent months, but also decreased to 2.93% in August 2025 — by almost two percentage points compared to the end of 2023.
The fact is that since 2015, China has been actively developing its alternatives to SWIFT, primarily the Cross-border Interbank Payment System (CIPS), which almost completely serves international trade in yuan. In the middle of this year, the system had more than 1,600 participants, including numerous organizations from Asia and Europe. The volume of payments made under CIPS is very significant.
In the first half of 2025, it reached about 90 trillion yuan ($12.7 trillion). For comparison, SWIFT operates in the amount of $150 trillion per year. The gap is quite significant, at first glance. But, firstly, SWIFT is a global system, and a significant part of it is devoted to trade within the eurozone, which significantly distorts statistics. Whereas in the case of CIPS, we are talking exclusively about trade interactions between residents of the People's Republic of China. Secondly, the growth of CIPS trading volumes is about 30-40% per year. Of course, it will slow down over time, but the distance is shortening very quickly.
Protection from sanctions
In recent years, yuan clearing centers have been opened in major financial centers like Singapore, London and Frankfurt. The People's Bank of China is also testing a digital yuan cryptocurrency from the central bank (CBDC). Access to it has been expanded to more than 20 countries, and the digital yuan is expected to further simplify cross-border payments and reduce dependence on Western banks.
The external assets of Chinese banks in yuan — loans, deposits and bonds — have quadrupled in five years and reached $480 billion. This is almost half of the approximately $1 trillion in China's external loans under the Belt and Road Initiative. Interest rates in yuan are 2-3 percentage points lower than in dollars. Currently, one group of countries has converted old dollar debts into yuan, while another is issuing new bonds in Chinese currency.
China has also signed currency swap agreements with more than 50 countries. These agreements allow central banks to exchange their local currencies for yuan on demand, giving countries such as Russia and Iran critical protection from U.S. sanctions that block access to the dollar. They are a great help for countries that are heavily dependent on Chinese trade and investment, such as Argentina, Pakistan and Turkey.
Strong yuan in limited quantities
One of the direct consequences of such a policy may be a long-term strengthening of the yuan. At one time, the US Treasury Department adopted a "strong dollar" policy. Now Chinese President Xi Jinping and Chinese elites in general have adopted their own version of the "strong" currency policy. At the same time, it is noticeable that Beijing is becoming bolder in its plans.
And just as the policy of a "strong dollar" was not necessarily about actively seeking to make the currency more expensive, China's plan is not specifically aimed at raising the exchange rate. It is more aimed at encouraging the wider use of the yuan as a medium of exchange in international trade and financial flows, as well as as a store of value that global asset managers can consider in their portfolios.
But, since the collapse of the currency is unlikely to contribute to the achievement of such goals, there is certainly an element of the exchange rate. The measures taken by the Chinese authorities to support the internationalization of the yuan may, in turn, "generally help keep its value afloat," wrote analysts at Standard Chartered Bank for China, led by Dean Shuang.
The CPC leaders, in the general provisions of the new five-year plan for 2026-2030, published in October, called for "promoting the internationalization of the yuan." This is a significant change from the previous plan, which stated that China would "prudently" promote the internationalization of the yuan. The People's Bank of China then issued a statement on how it would implement the new leadership rhetoric. The regulator said it would expand the use of the currency in trade, deepen the bilateral opening of financial markets in an orderly manner, and further develop the offshore yuan market. One of the elements of the program is to increase the use of the yuan in China's own trade flows, in which steady progress has been achieved.
In their five-year plan, China's leaders also called for "increasing the level of openness of the capital account." However, we should not expect a complete abolition of the long-standing control measures introduced to save money for households and companies, mainly inside China. It is obvious that Beijing is not planning a targeted campaign to completely displace the dollar's dominance in the global financial system. A more realistic goal may be to achieve parity status with the second—tier currencies, the British pound or the yen.
At the same time, China's own trade will be reliably protected. Thus, an inter-regional system will be formed, self-contained, which will not depend on fluctuations in major currencies. For more, China will have to liberalize financial markets and completely abolish capital controls. Beijing is not ready for this, at least not in the near future. However, the system created by the Chinese indicates an irrevocable change in global finance and economics towards a multi-layered group of blocks, bilateral and multilateral agreements and other mutual obligations that will not lead to a single center. This will become the prototype of a multipolar world.
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