By Tuugi Chuluun, Loyola University Maryland
The Chinese economy’s sheer size and rapid growth are impressive.
China has maintained one of highest rates of economic growth in the world over the past quarter century. It helped lift 800 million people from poverty in only a few decades. China is the world’s largest exporter and the main trading partner for Japan, Germany and Brazil, among others. According to the market exchange rate it is the second-largest country in the world, but the largest according to purchasing power.
The yuan is still not a major currency in the world. This may change with the war in Ukraine that began in February 2022.
As a professor of finance and expert on international finance, I understand how this geopolitical conflict may put China’s currency on the next phase of its path to becoming a global currency – and prompt the onset of the decline of the U.S. dollar from its current dominance.
Chinese yuan’s slow progress
China has long aimed to make the Yuan a global currency and has made significant efforts in recent years to achieve this goal.
CIPS is an example of the Chinese government’s Cross-Border Interbank Transactions System.