In this section:

  • China’s Renminbi Doubles Its Share of World Trade Payments
  • Brazil’s President Urges Developing Nations to Dump the Dollar
  • China’s Yuan Will Not Replace Dollar as World Currency, WSJ Says


Since Western allies levied sanctions on Russia after it invaded Ukraine, the proportion of world trade paid for in China’s renminbi currency has more than doubled, according to the Financial Times.

From 2 percent in February 2022, the renminbi’s share has grown to 4.5 percent.

That puts the renminbi hot on the tail of the euro, which is used in 6 percent of the world’s trade payments.

The dollar still accounted for 84.3 percent of bills paid in international commerce in February this year, although that share is down from 86.8 percent a year earlier.

The recent rise in U.S. interest rates also may be making the renminbi more attractive in trade, the FT noted. 

In the last 12 months, the U.S. Federal Reserve has raised its key rate nine times; during the same period, the People’s Bank of China trimmed its prime loan rate twice.

“This is a substantial move,” Mansoor Modi-Uddin, the Bank of Singapore’s chief economist, said to the FT. “It’s hard to think of anything else behind this step change other than the war in Ukraine.”

The renminbi’s rise also represents a victory for Beijing in its quest to dethrone the dollar as the world’s currency of choice. (See “Spotlight: Bye Bye Bucks—The Death of the Dollar” 4 Apr 2023.)

“Given the timing, it’s likely that a lot of [the renminbi’s advance] represents Russian trade [with China], which is done through intermediaries,” Arthur Kroeber, a founding partner of Gavekal Dragonomics, a research firm focused on China, said to the FT.

As an example, he cites data showing a spike in Chinese oil imports from Malaysia that exceed Malaysia’s production capacity.

“The fact that Russia itself is cut off from SWIFT” – the clearinghouse for international trade deals – “is perhaps irrelevant,” he added.

PUBLISHER’S NOTE: Please see our ECONOMIC OVERVIEW in this issue for additional trends analysis and trend forecast relative to The Death of the Dollar.


Developing nations should begin trading with each other and China in their own currencies instead of using the dollar as an intermediate standard of value, Brazil’s president Luis Ignacio Lula da Silva said during a speech during his state visit to China last week.

“Every night I ask myself why all countries have to base their trade on the dollar,” he said. He suggested Brazil, Russia, India, and South Africa—the so-called BRICS countries—and China work to dismantle barriers to accepting each other’s currencies, as Brazil and China have done in a deal announced last month. (See “Brazil and China Abandon the Dollar, Will Trade in Own Currencies” 4 Apr 2023.)

“Who was it who decided the dollar was the currency after the disappearance of the gold standard?” Lula continued, reportedly drawing applause from his audience.

Lula’s call to dethrone the dollar aids China’s efforts to assert its yuan and renminbi currencies as viable replacements for the dollar in world trade. 

Trade between Brazil and China grew to $150.4 billion last year, the Financial Times reported. China has signed contracts to buy the Latin American giant’s minerals and agricultural products.

Last week, the Brazilian branch of China’s state-owned Industrial and Commercial Bank settled its first transaction directly in renminbi, Chinese state news outlets said.

Lula, who has tacked toward a non-aligned foreign policy since taking office on 1 January, also visited the offices of Huawei, the telecommunications giant that has been sanctioned by the U.S.

TREND FORECAST: Lula is not only moving away from the dollar he is moving away from the United States as are other BRIC nations. See our article in this issue of The Trends Journal: “BRICS ON THE RISE: BRAZIL’S LULA WARMS UP CHINA, COOLS DOWN ON AMERICA.”


The dollar’s place as the world’s reserve currency and medium of choice for international trade is safe from the Chinese yuan, according to an analysis by The Wall Street Journal.

China has been maneuvering to make its currency convertible with those of several individual nations in an attempt to gradually dislodge the dollar, as we reported in “Brazil and China Abandon the Dollar, Will Trade in Own Currencies” and “ASEAN Nations Prepare to Shift Trade Payments to Local Currencies” (4 Apr 2023). 

Although the dollar’s share of central banks’ reserve currency stockpiles has slipped in recent years to 60 percent, that proportion remains greater than all other currencies combined, the WSJ noted.

In contrast, China’s currency made up only 2.7 percent of the world’s currency reserves last year, the WSJ said.

Also, more than half of global trade is paid in dollars, although the U.S. itself accounts for less than 20 percent of the world’s export sales.

In addition, the dollar was involved in 88 percent of all currency trades last year, a survey by the Bank for International Settlements found.

One key factor restricting the yuan’s reach: China has strict currency controls, which limit the amount that foreign companies can borrow or invest using yuan, other than paying bills involved in doing business in China.

Also, China’s capital market remains relatively small, as does its foreign market for yuan.

While a growing number of countries accept yuan as payment for trade, many of those countries apparently are converting their yuan to dollars, which is still seen as the safest, most widely accepted currency.

Without currency controls, China’s investors could invest yuan abroad, cutting into savings that the country needs to fuel its plan for a growing consumer economy.

China’s strategy for growth depends on exports and on government-enforced low interest rates to drive growth of state-owned corporations.

A yuan as freely traded as the dollar would force China to scrap that strategy and rethink its approach to growth, the WSJ noted.

TREND FORECAST: The dollar will begin to surrender its title as the world’s leading currency if and when oil is no longer traded exclusively in dollars.

Until then, as the world shifts to electric mobility and places greater emphasis on energy conservation, the dollar’s predominance will continue to erode under the yuan and renminbi’s onslaught as well as nationalistic currency moves, such as India’s to promote its rupee as an internationally convertible currency. (See “India Shifts Away From Dollar, Promotes Rupee as a Global Currency,” 4 Apr 2023).

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