admin Shanghai, June 2025 – China has reaffirmed its ambition to reshape the global financial order by promoting the renminbi as a core component of a “multi-currency system” designed to reduce the systemic dominance of the US dollar.
Speaking at the Lujiazui Forum in Shanghai, People’s Bank of China (PBoC) Governor Pan Gongsheng said the world economy is transitioning towards a model in which several sovereign currencies coexist, counterbalancing each other to ensure greater stability. Pan warned that overdependence on a single currency amplifies fiscal risks, not only for the issuing country but globally.
Highlighting the renminbi’s ascent, Pan noted it is now the world’s second-largest currency in trade finance and the third in international payments. He called for the modernisation of cross-border transactions, particularly through the adoption of digital technologies and China’s own central bank digital currency (CBDC), to reduce reliance on dollar-centric systems.
Strategic Infrastructure and Financial Partnerships Support Renminbi Push
To advance its goals, China is reinforcing the infrastructure supporting renminbi-based trade. Beijing has increasingly settled bilateral trade with countries like Russia and Iran in renminbi, often via smaller domestic banks less exposed to US sanctions. These arrangements help mitigate dollar-related vulnerabilities while enabling continued trade under challenging geopolitical conditions.
Pan acknowledged long-standing challenges to broader renminbi globalisation, including capital controls and China’s large trade surplus, which often leads to renminbi returning swiftly to domestic markets. To address this, authorities plan to expand the Qualified Domestic Institutional Investor (QDII) program, giving Chinese investors greater access to foreign assets and easing capital flow constraints.
Additionally, new agreements between financial hubs—such as Hong Kong and Shanghai—aim to enhance cross-border financial cooperation, especially around renminbi-denominated assets. Pan also encouraged renewed focus on Special Drawing Rights (SDRs) through the IMF as a means of reducing overreliance on national currencies.
While the dollar remains dominant, China’s gradual, infrastructure-first approach signals a strategic recalibration of the global monetary landscape—prioritising regional adoption and long-term resilience over immediate transformation.
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