The Chinese government is taking the country's currency – the yuan or renminbi – global in a bid to oust the United States dollar as the world's foremost currency.
Chinese President Xi Jinping's government has been busy over the past year striking deals to expand the ways in which the yuan is used. Countries like Argentina, Bangladesh, Brazil, Iran, Russia, Saudi Arabia and even France have recently signed new agreements linked to the use of the renminbi. (Related: DE-DOLLARIZATION: China now uses the yuan for cross-border transactions more than it uses the US dollar.)
"The yuan is becoming increasingly relevant as currency for international trade," said Luis Galli, chief executive officer of the Newsan, one of Argentina's largest home appliance retailers.
Last month, in a bid to relieve pressure on the Argentinian economy due to its lack of U.S. dollars, Newsan started settling deals in the Chinese yuan. This has been a boon for the company that mainly imports its products from China and, until recently, was paying for its appliances in the dollar.
This was followed by a deal the Argentine government struck with China in April to purchase around $1 billion worth of imports from China in yuan, and another $790 million worth of monthly imports thereafter. The Argentine government also activated a currency swap agreement, allowing Argentinian corporations to borrow yuan from China.
Other nations are making similar moves greatly benefiting China and increasing the prevalence of the yuan in the global stage.
Brazil last month announced that companies can now settle their trade in the yuan, and a major Brazilian bank – Banco BOCOM BBM – is now transitioning to using the yuan as its default currency for international transactions. Last month, Bangladesh announced it would conclude a $318 million deal with a recently sanctioned Russian nuclear power developer using the yuan.
Iran, which has been heavily sanctioned by the U.S. for decades, has been using the yuan to settle trade as far back as 2012 when it allowed China to purchase crude oil using the yuan. In February of this year, Tehran and Beijing reopened negotiations to expand the use of the yuan as well as the Iranian rial in bilateral trade.
And in Russia, the yuan has become exponentially prevalent in Russian financial life. Sixteen percent of exports and 23 percent of imports are paid for using the yuan, 11 percent of foreign exchange deposits are now made in the yuan and a whopping 40 percent of foreign exchange trading volumes involve the yuan.
Even President Emmanuel Macron of France, a key ally of the U.S., warned against the "extraterritoriality of the U.S. dollar," suggesting in an interview that Europe should cut its dependence on the greenback. This comes at around the same time he signed a whole host of new commercial agreements with China, some of which will involve the use of the yuan.
American dollar's place in the world stage slowly diminishing
The American dollar has been the world's reserve currency since the Second World War and has for nearly a century played a massively outsized role in the world's trade. Today, it remains the clear premier global currency and the U.S. is still considered the world's foremost financial powerhouse.
But China's latest moves are helping the communist nation carve out a bigger place for itself and the yuan within the international financial system. The de-dollarization campaign has quickened its pace since the Western world, led by the U.S., froze Russia's entire stockpile of American dollars over its special military invasion in Ukraine.
This has led countries worldwide to diversify their own currency holdings for fear of the U.S. unilaterally making similar moves against their own economies. They consider what happened to Russia as a warning over the oversized power that Washington currently wields and a sign that the world needs to create an alternative financial system.
"[China] is working to demonstrate that there's a world outside of the U.S. and the Western world," warned Adrian Zuercher, an executive at UBS Global Wealth Management's Hong Kong office. "You're sending a very strong signal to the U.S. by basically saying we don't need you and we don't need your U.S. dollar."
"China's willingness to maintain growth while paving new paths lends itself for other nations to have greater confidence to use the yuan," said Victor Gao, a spokesperson for the Chinese Communist Party. "If the U.S. wants to rock the boat, then China will need to make necessary amendments to meet the challenges."
Learn more about the declining status of the American dollar on the world stage at DollarDemise.com.
Watch this episode of the "Health Ranger Report" as Mike Adams, the Health Ranger, warns about the accelerating speed at which the world is divesting from the dollar.
This video is from the Health Ranger Report channel on Brighteon.com.
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US dollar rapidly losing world reserve currency status; China, Russia (BRICS) to replace it.
BRICS nations rapidly working to create common currency to counter US dollar's global hegemony.
China settles first LNG trade using YUAN – a major blow to the petrodollar.
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