Xi Jinping wants to bypass the U.S. dollar in international trade, but President Trump doesn’t want him to—and Trump will get his way.
Xi’s first choice is for the world to adopt the Chinese yuan as a trade and reserve currency. Although officially recognized as an international currency and included in the International Monetary Fund’s (IMF) Special Drawing Rights basket, the yuan has failed to gain widespread adoption for trade or as a reserve currency. This is true even among BRICS partners and heavily indebted countries like Cambodia.
Currently, the yuan accounts for only 2.3% of global foreign currency reserves and 3% of all trade settlements. Many articles feature headlines suggesting that the yuan accounts for 26% of global trade. However, this figure actually refers to Chinese trade, not global trade. A significant portion of this trade is with Russia, a country barred from using U.S. dollars. Another widely cited statistic is that the yuan makes up 4.74% of “global transactions,” but this figure does not reflect trade settlement exclusively. Instead, it represents a mix of various uses, not just…
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