Xi Has Made China’s Currency Ambition Explicit

Xi Jinping has explicitly stated China's ambition for the renminbi to become a global reserve currency, signaling a settled policy direction within the Chinese Communist Party. While the currency's role in global reserves remains small, it has gained traction as a medium of exchange through strategic infrastructure like central bank swap lines and the Cross-Border Interbank Payment System. China's strategy involves building liquidity and settlement options where its trade ties are dense, allowing for gradual adoption based on convenience. The primary barrier to wider acceptance is a lack of confidence in exit, as China's capital controls raise concerns about liquidating assets during a crisis. For U.S. policymakers, the challenge is less about suppressing the renminbi's use and more about reinforcing the legal predictability and liquidity that underpins the dollar's dominance.