China’s De-dollarisation Initiatives: Strategies and Constraints

A decade ago, renminbi internationalisation was a hot topic; today, it’s part of a broader, more strategic push toward de-dollarisation – accelerated by Western sanctions on Russia. While China’s efforts to globalise its currency began earlier, the risk of financial exclusion has intensified its urgency. Beijing’s approach is pragmatic and multi-pronged: it is deepening engagement with regional and non-Western partners developing renminbi-based infrastructure for cross-border payments, and leveraging its dominance in clean energy supply chains to promote renminbi pricing in key commodities. These strategies aim to enhance the renminbi’s role in trade and settlement while persistent structural factors – shallow capital markets and limited investor confidence – remain stumbling blocks for China’s currency becoming a global store of value. That may just be fine with Beijing, at least in the near to medium term. No evidence suggests China plans to dethrone the US dollar or replace the US dollar with the renminbi as the global dominant currency. China’s immediate goal is to insulate itself from financial sanctions in the dollar-based system. In a world where access to American banks and US dollar can be weaponised, China regards a functional alternative for cross-border settlement as a strategic necessity. With a trade-dependent economy and a leadership wary of volatility, China’s priority is currency stability, not supremacy.