Chinese President Xi Jinping says the yuan should be a global reserve currency.
China needs a “strong currency” that can be “widely used in international trade, investment, and currency markets and obtain reserve currency status,” he said in an article in the Chinese Communist Party’s official journal, Qiushi.
According to the head of state, the country needs a “powerful central bank” capable of effectively managing funds, globally competitive financial institutions, and international financial centers that can “attract global capital and influence global pricing.”
The Chinese leadership has long been trying to stimulate the internationalization of the yuan, but it is now becoming clearer what Xi Jinping means when he talks about the need for a “strong currency” and the financial foundation that needs to be built to support it, writes the Financial Times.
He first made these statements in an address to senior regional officials in 2024, but they were not published until last Saturday.
The Chinese leader’s article was published amid heightened uncertainty in global markets. The weakening of the dollar, the upcoming change in leadership at the Federal Reserve, and geopolitical and trade tensions have forced global central banks to rethink their dependence on dollar assets.
“China feels that a change in the world order is more real than ever,” notes Pantheon Macroeconomics economist Kevin Lam. According to him, Xi Jinping’s increased attention to the yuan reflects “new cracks in the world order.”
According to the International Monetary Fund, in the third quarter of last year, the yuan’s share in global reserves was only 1.93%, ranking sixth among all currencies. The dollar accounted for about 57% (compared to 71% in 2000), and the euro for about 20%.
