China Cannot Afford to Use Its Alternative to the Dollar

RealClearWorld ^ | 8/10/26 | Jacob Childress

[EnderWiggin1970]

Over the past eighteen months, nearly every condition analysts have long said would erode the dollar's dominance arrived at once. War broke out in the Persian Gulf. The Strait of Hormuz has closed, reopened, and closed again, and remains shut as this is written. Iran began charging transit tolls denominated in yuan. Indian refiners started settling Russian crude in yuan and dirhams, the first time a top-five oil importer structurally routed around the dollar for energy. China's cross-border payment system posted record volumes, clearing 1.22 trillion yuan in a single day in March. Central banks bought gold at a pace not seen in half a century. If the dollar's position were going to crack, this was the stress test.

Over that same stretch, the yuan's share of global payments fell. SWIFT's tracker put the renminbi at 4.33 percent of world payment volume in February 2025, good for fourth place among currencies. By February 2026 it had dropped to 2.74 percent and sixth place. The dollar's share sat near 48 percent and did not move much.

That gap between the conditions and the outcome is the most important thing happening in international finance right now, and almost nobody is describing it accurately. One camp insists the dollar's collapse is imminent and has been saying so for fifteen years. The other waves off the entire alternative financial architecture as theater. Both are wrong in ways that matter, and the truth underneath is considerably more interesting than either.

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TOPICS: Business/Economy; China; Foreign Affairs; Government
KEYWORDS: brics; china; currency; dollar; economics; energy; gold; iran; oil; renminbi; reserve; speculation

[EnderWiggin1970]

For a grunt this guy has an impressive grasp of international trade and economics.

[Bayard]

Legal system underpinning the dollar is just better.

[Raycpa]

I read on here that the sky was falling.

[Ahithophel]

The buried lede:

"A currency becomes a reserve currency when foreigners can acquire it freely, hold it safely, move it without permission, and trust that a court will enforce a claim denominated in it. Beijing permits none of those things. Capital controls determine how much renminbi can exist beyond China's borders, and Beijing keeps that number small on purpose."

"To make the yuan a genuine reserve currency, Beijing would have to permit exactly the capital mobility that its own experience says would destabilize the system the Party exists to control. It can build the rails, and it has. It can wire in the partners, and it is doing that too. What it cannot do is fill the pipes, because filling them requires letting money leave."

China hasn't come up with an original, sustainable idea since gunpowder during the Tang Dynasty.

[marktwain]

China invented paper money (and the inevitable inflation) about a hundred years later.

Paper money and inflation have been “sustainable” ideas which were exported and are now in wide use.

I did not say they were “good” ideas....

[DUMBGRUNT]

And then we have fractional reserve banking.

Maybe/kind of/sort of invented by the Medici around the 12th century AD.

Such a deal!

“Success has many fathers, failure is an orphan”

[delta7]

All paper currencies are debt, all paper currencies lose purchasing power, ( the USD has lost 23 percent since 2021- according to FRED), when debt can no longer be serviced ( paid) , the currency goes bust.

What’s the big deal, USD, Yuan, Euro, Yen, etc....all eventually go to ZERO. The USD will be the last, but rest assured, it to will go to zero.

[Gay State Conservative]

The Dollar,the Pound,the Euro,the Yen and the Swiss Franc are the world's currencies of commerce. The Chinese currency is worth just about as much as the Chinese passport.

[woodbutcher1963]

Should we all buy GOLD ?

asking for a friend

[TTFX]

When the moment comes that the government has to print a million dollar bill, they should put Nobel Prize winner Ben Bernanke’s face on it.

[Retain Mike]

"One camp insists the dollar's collapse is imminent and has been saying so for fifteen years."

This nearly a glacial prediction.