China’s plans for yuan unfazed by Trump’s pledge to protect ‘mighty US dollar’

China may need to exercise caution when promoting the overseas use of the yuan over the next four years, analysts said, as US president-elect Donald Trump appears poised to make the preservation of the status of the US dollar a top priority in his second term.

But given the yuan’s current share of international payments, foreign exchange reserves and commodity pricing – none of which befit China’s status as producer of 17 per cent of global economic output, they argued – US policy will do little to deter Beijing’s long-term plans for the internationalisation of its currency.

His fierce defence of the “mighty US dollar” was viewed as a preview for how his administration will attempt to maintain the currency’s status as the global reserve.

But Zhu Feng, dean of the Institute of International Relations at Nanjing University, said the use of local currencies among developing nations is unrelated to any broad de-dollarisation campaign.

“The use of yuan and local currencies to settle among Brics countries is for trade facilitation and has little impact on the [US] dollar’s unrivalled dominance,” he said. “Beijing should send a clear message to Washington.”