China, on the verge of a currency "revolution" - How does the growth of the Chinese currency affect the international market?
The debate over the dollar's continued dominance in the global monetary system is a recurring one, with its "eternal" rival, the euro, seen as the main threat to its supremacy. However, China seems to be gradually gaining ground, with the yuan becoming a key player in international transactions, although it has yet to challenge the hegemony of the US currency. However, the latest data shows that the Chinese yuan is now just one step away from surpassing the British pound as the fourth most powerful currency in the world.
According to a three-year survey by the Bank for International Settlements (BIS), the yuan currently represents 8.5% of global trade, compared to just 7% in 2021. This growth clearly reflects the depth of Beijing's efforts to strengthen the international use of its currency, mainly through trade-financial expansion mechanisms and swap lines with a number of countries. In contrast, the British pound has seen a significant decline: from around 13% in 2019, it has now fallen to 10.2%, gradually losing the weight it has traditionally had in global markets.
This development does not mean that the yuan will soon threaten currencies like the dollar or the euro, which account for most transactions and remain essential to the functioning of the international financial system. However, it is a clear indication that China's strategy is working. By strengthening trade relations, increasing its presence in global organizations, and developing infrastructure such as the CIPS payment system, Beijing aims to gradually internationalize its currency in the long term.
Analysts estimate that the possible reversal of the yuan against the pound will also have great symbolic weight, as it will highlight the change in the balance between two diametrically opposed economic models: on the one hand, post-Brexit Britain, which is trying to redefine its role on an unstable international stage, and on the other, the Asian economic superpower that is resolutely consolidating its presence.
But the question that arises is whether global actors will choose to place more trust in a currency that, despite its growing use, continues to be strictly controlled by Beijing.
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