US president Donald Trump’s protectionist policies will hasten the rise of the international importance of the Renminbi, enabling the Chinese currency to be one of the major global currencies, according to expert speakers at a Sino-German Center virtual roundtable on September 2.
“The US dollar base is weakening. The US dollar is still the global reserve currency, but with uncertainty on (Trump’s) policies like tariffs, the belief in the US dollar as a reserve currency is weakening,” said Fan Shilei, the People’s Bank of China’s chief representative in Frankfurt, Germany, at the roundtable.
“There is declining trust in the US dollar. China is the only country ready to lead with an alternative system,” Fan said.
Another speaker at the roundtable, Johannes Petry, a researcher at Goethe University in Frankfurt, predicted the US dollar will become less important due to Trump’s tariffs and the large US trade deficit. The US Federal budget deficit was $291 billion in the month of July 2025 alone, a year-on-year increase of 19%. The deficit is $2 trillion for the first 11 months of this current fiscal year
“The big issue is trust,” Petry explained.
International investors
International investors are not completely trusting China yet, but China is strengthening its position, Petry said.
International optimism on the US dollar started to crumble when Trump’s confrontative trade policy aimed at key trading partners became increasingly visible, said a report of Julius Baer on July 23.
“The erratic nature of policymaking on the trade front, culminating with the announcement of punishing reciprocal tariffs on Trump’s ‘Liberation Day’ on April 2, provoked a following leg of rapid USD weakening by more than 10%.”
“Negative US dollar sentiment has been spreading in markets, with investors questioning the US dollar’s safe-haven character. This is especially as the currency had decoupled from US interest rates in the wake of the Liberation Day shock. Further developments, such as the recent passing of the ‘One Big Beautiful Bill Act’, cementing high budget deficits and an unsustainable debt trajectory, and the constant pressure on the Fed to lower interest rates, have further undermined investors’ confidence in the US dollar,” said the Julius Baer report
The report added: “We therefore believe that the US dollar has entered a longer-term bear market fuelled by policies that bypass checks and balances, and promotes distrust in US assets and ultimately challenges the value of the US dollar.”
In contrast, the Renminbi, also called the yuan, is in “the rapid rise scenario,” said Petry. “We’ve seen this in the last one to two years.”
The use of the Renminbi is cross-border international payments have jumped from $1 trillion in 2017 to $9 trillion in 2024, Petry pointed out. The Rmb accounted for 40% of Chinese banks’ overseas lending in 2024, a big increase from 10% in 2015, with the value of the overseas loans leapt nearly fivefold to $240 billion in 2024 from $50 billion, Petry said.
The issuance of Panda bonds soared from Rmb90 billion in 2022 to Rmb160 billion in 2023, said Fan. Dim sum bonds, offshore Rmb bonds, mainly issued in Hong Kong, are also set to climb to a new high this year.
According to the People's Bank of China, total cross-border yuan payments and receipts increased 21.1% year-on-year to Rmb41.6 trillion ($5.9 trillion) between January and August 2024.
There is high usage of the Chinese currency in countries of the Global South like Argentina, Chile, Pakistan and Iran, but less among the developed countries of the Global North, Petry said.
However, the use of the Renminbi in international finance is still modest, accounting for 3.4% of the world’s currency turnover, far smaller than the greenback’s 40%, Petry qualified. “The Renminbi will not replace the US dollar in the foreseeable future.”
The global supremacy of the greenback is underpinned by the status of the US as the preeminent military power.
“Military hegemony is important for a reserve currency,” said Fan. Military protection will provide security for cross-border transactions and stability of international supply chains, Fan explained.
In the long term, the international financial system will evolve to be dominated by a few sovereign currencies, including the US dollar, Rmb and Euro, Fan forecast.
