ANALYSIS: The Yuan as a Weapon — How Beijing and Moscow are Shaking Dollar Hegemony

When currency becomes the battlefield

There was no declaration of war. No detonation, no satellite shot down, no missile launched. And yet, for three years, a battle of paramount importance has been unfolding in silence within the banking systems of Moscow, Beijing, Dubai, and Hong Kong. The Chinese yuan has become a geofinancial weapon, methodically sharpened by Beijing to sever the threads connecting Moscow to the rest of the Westernized world — and, progressively, to threaten the very structure that gives Washington its global sanctioning power. We are talking about the architecture of the dollar, of SWIFT, and of the West's ability to economically punish whomever it wants, whenever it wants.

The figures speak louder than speeches. More than 90% of bilateral trade between Russia and China is now settled in yuan and rubles, without passing through the dollar. Total trade between the two countries reached approximately $227.9 billion in 2025 — the third consecutive year above the 200 billion mark. Behind these dry statistics lies a monetary revolution that the West is still struggling to measure in its full scope.

The 2022 turning point and the birth of an alternative

Everything changed in February 2022, when Western democracies responded to the criminal invasion of Ukraine by disconnecting major Russian banks from the SWIFT network and freezing approximately $300 billion in Russian Central Bank reserves. This was an unprecedented systemic shock in modern monetary history. For Vladimir Putin, it transformed a theoretical dependence on the dollar into an existential strategic vulnerability. For Xi Jinping, it offered on a silver platter the ultimate argument to push the world toward the yuan: if Washington can freeze your assets overnight, your monetary sovereignty does not exist.

In the months that followed, Moscow and Beijing built a parallel financial infrastructure at a speed that few observers had anticipated. The CIPS system — Cross-Border Interbank Payment System — became the Chinese alternative to SWIFT for yuan payments. Currency swap lines between the People's Bank of China and the Bank of Russia were activated up to 150 billion yuan. And the digital yuan, the e-CNY, began to establish itself as a cross-border settlement infrastructure via the mBridge project.

What strikes me is the speed. In three years, two countries have built a financial architecture that experts estimated impossible to implement in less than a decade. I cannot help but think that the West — which nonetheless triggered this dynamic by freezing Russian reserves — still underestimates the reach of what it has involuntarily accelerated. It's not magic: it's panic transformed into strategy.

The Siluanov declaration that changed everything

In May 2026, during the 11th Russo-Chinese Financial Dialogue in Beijing, Russian Finance Minister Anton Siluanov uttered a sentence that resonated like a thunderclap in the corridors of the US Treasury and the European Commission: 99.1% of trade payments between Russia and China are now made in national currencies — yuan and ruble — without a single dollar, without a single euro. This figure is not a projection, not a target: it is the operational reality confirmed by the Kremlin's chief financier.

Yuri Ushakov, diplomatic advisor to Vladimir Putin, confirmed the same trend: practically all payments related to the $240 billion in trade between the two countries now transit in yuan and rubles, "which protects them from Western sanctions." It's a succinct formula, but it says everything about the strategic logic at work: the yuan is not just a transaction currency, it is a geopolitical shield.

The concrete architecture of bilateral de-dollarization

How does this system work in practice? Energy, raw materials, machinery, and consumer goods — the heart of bilateral trade — are settled directly in rubles or yuan via CIPS. Chinese companies export to Russia; Russian companies export oil, gas, metals, and wheat to China. Payments transit through regional Chinese banks located along the Sino-Russian border, institutions that Washington cannot easily sanction without provoking a major diplomatic crisis with Beijing. The Bank of Russia itself regularly buys yuan on the domestic market: on June 17, 2026, it thus acquired the equivalent of 5.3 billion rubles in yuan, or about $72 million.

This is not a marginal or experimental phenomenon. It is a structural and deliberate reorientation of the monetary architecture of the world's second-largest army and the world's second-largest economy. And it happened under the West's nose, often dismissed as Kremlin "propaganda communication" — until the numbers became impossible to ignore.

99.1%. This percentage haunts me. Because it means that the tools the West has used since 2022 to strangle Moscow — sanctions, asset freezes, exclusion from SWIFT — have produced the exact opposite effect on the Sino-Russian relationship. I'm not saying the sanctions were a mistake. I'm saying they accelerated the construction of an alternative world that we should have anticipated — and to which we still have no coherent response.

The explosive growth of a parallel network

If the yuan is the weapon, CIPS is the ballistic vector. Launched in 2015 as a simple clearing mechanism for yuan payments, this system has become since 2022 a central piece in the architecture of global de-dollarization. As of the end of March 2026, the CIPS network has 194 direct participants and 1,597 indirect participants, covering companies in 191 countries and regions. The number of direct participants has more than tripled since 2020. It is no longer a peripheral curiosity — it is a rapidly developing global network.

The volumes are telling. On April 2, 2026 — the day after Donald Trump's threats to bomb Iran — CIPS processed the equivalent of 1.22 trillion yuan, or approximately $180 billion in a single day, nearly doubling the average daily volume of February. According to the European Central Bank, activity on CIPS jumped by about one-third in March 2026 compared to the average of the previous twelve months, notably due to the war in the Middle East pushing oil-producing nations to accelerate their transition to the yuan to avoid being exposed to potential US sanctions.

CIPS versus SWIFT: the real balance of power in 2026

Let us be precise, as disinformation in this area is common: CIPS is not the equivalent of SWIFT, and it would be intellectually dishonest to claim otherwise. SWIFT connects more than 11,000 financial institutions in more than 200 countries and processes trillions of dollars per day. CIPS is still far from that. The dollar maintains 88% of global foreign exchange transactions and 59% of central bank official reserves. SWIFT itself continues to dominate international payments, with the dollar involved in nearly 50% of messages.

But what is changing — and this is where the real threat lies — is the dynamic. The yuan's share in global trade financing rose from 5.5% in 2024 to around 8% in March 2026, according to the ECB. The yuan has become the second trade financing currency globally, according to the People's Bank of China. And 41% of Middle East crude oil trade with China was settled in yuan in March 2026 — a historic first. The petrodollar, that pillar of American hegemony since the 1970s, is beginning to crack.

I want to be honest: I am not an economist, and interbank clearing mechanisms are not exactly my specialty. But when even the ECB starts dedicating a section of its annual report on the international role of the euro to the growth of CIPS, I understand that something structural is being modified. The silence of Western economists in the face of these numbers concerns me as much as the numbers themselves.

Xi Jinping plays both sides simultaneously

What makes Beijing's strategy so formidable is its sophistication. China has not launched a frontal confrontation with the dollar. It is playing a multi-decade chess game. On one hand, it continues to trade with the West, to respect — formally — US secondary sanctions to protect its large state banks, and to keep its tech companies in global markets. On the other, it is methodically building an alternative financial infrastructure: CIPS, the digital yuan, mBridge, swap lines, and yuan bonds.

On February 1, 2026, Xi Jinping himself called for making the renminbi a world reserve currency — one of his most direct statements on the subject. This is not rhetoric: it is a roadmap. At the same time, Beijing is opening a digital yuan hub in Shanghai, modifying CIPS rules to allow foreign institutions to participate without going through onshore banks, and seeing the mBridge project — a central bank digital currency platform involving China, the UAE, Saudi Arabia, Thailand, and Hong Kong — reach $55.49 billion in cumulative volume in January 2026, a 2,500-fold increase since the 2022 pilots.

The calculated limits of the Chinese commitment to Moscow

It would, however, be inaccurate to describe the Sino-Russian relationship as a perfect monolithic alliance. Beijing plays a selfish and rational game, and the Center for European Policy Analysis — CEPA — documents this precisely in its June 2026 report on the Sino-Russian authoritarian threat: China helps Moscow survive sanctions but deliberately refuses to grant it full access to its capital markets. Chinese direct investment in Russia fell to about 400 million dollars per year in 2022-2023, down from 1.2 billion previously. Russia represents less than 0.4% of China's total outward foreign direct investment. Beijing fears that Moscow might be unable to repay its debts.

What Beijing is doing is offering Russia a limited monetary lifeline — just enough to sustain the war in Ukraine, not enough to constitute a real economic rescue. Chinese foreign policy is cynical in its precision: it maximizes its strategic advantages — a weakened but still useful Russian partner, a developing alternative financial architecture — while minimizing its exposure to US secondary sanctions.

It is precisely this cold calculation that makes China more worrying to me than Russia. Putin is a reactive despot, predictable in his aggression. Xi Jinping is a patient strategist who thinks in decades. Russia is an immediate threat to Ukraine and Europe. China is the systemic threat to the liberal world order. And it uses the yuan as a scalpel, not a hammer.

The post-Soviet space and the circle of monetary allies

De-dollarization is not limited to the Sino-Russian bilateral relationship. It radiates outward. In the post-Soviet space, the share of settlements in national currencies between Russia and its CIS partners reached 96% in 2025, compared to 90% in 2024. In Kyrgyzstan, 97% of settlements with Russia are in rubles. These figures illustrate how Moscow has used Western isolation to consolidate a monetary sphere of influence in its "near abroad."

Even more significant: the contagion effect is now reaching countries outside this space. Bangladesh, for example, concluded an agreement with Russia in June 2026 to settle in yuan — via CIPS — repayments for the Rooppur nuclear power plant, built with Russian financing. Unable to pass through usual banking channels due to US sanctions, Dhaka had to resolve to use the Chinese financial infrastructure as an intermediary. This is not an ideological choice: it is compulsion turned into habit, and that is how alternative systems gain ground.

Saudi Arabia, the petroyuan, and the crack in the petrodollar

The most symbolically heavy case is that of Saudi Arabia. Since the 1970s, the petrodollar has been one of the pillars of American hegemony: oil-exporting countries sell in dollars, recycle their dollars into US Treasury bonds, supporting the demand for US debt and the value of the greenback. This system is beginning to crumble. In March 2026, 41% of Middle East crude oil trade with China was settled in yuan — a historic first, with the yuan ranking as the second settlement currency in this corridor for the first time. Riyadh is not yet ready to break with the dollar, but it is diversifying, testing, and insuring itself against the risk of one day being in Washington's sights.

The People's Bank of China has signed bilateral yuan swap lines with more than 40 central banks. The mBridge project now involves Gulf players. The architecture is consolidating, piece by piece, agreement by agreement, while the West continues to debate the "real" value of the yuan and its structural limitations.

I remember reading, five years ago, analyses claiming that the petroyuan was an illusion. Today, 41% of Middle Eastern oil sold to China is settled in yuan. I am not saying the petrodollar is dead — it is not. I am saying that we have perhaps laughed for too long at scenarios that are now coming true before our eyes.

Large Chinese banks play it safe against secondary sanctions

The reality of the Sino-Russian de-dollarized system is more complex than the Kremlin's triumphant declarations suggest. According to South China Morning Post reports from June 2026, major Chinese state banks — ICBC, Bank of China, Agricultural Bank — have considerably tightened their compliance verification procedures for Russia-related transactions. The risk of US secondary sanctions, notably since the new Biden/Trump administration measures of 2024-2025, forces them to increase delays and demand detailed justifications. Payments that should take a few hours sometimes take weeks, or are blocked without explanation.

To bypass these obstacles, Russian companies have developed what analysts call "shadow financing chains": specialized payment agents based in Hong Kong, the United Arab Emirates, and Turkey who serve as buffers and camouflage the origin of transactions. These systems work, but they add considerable friction costs — what analyst Alexei Chigadaev of the Neo-Eurasian Strategy Center calls an "uncertainty tax": unexplained returned funds, transfers blocked for weeks, structural instability that eats away at the system's efficiency.

Yuan bonds and Moscow's growing structural dependence

In May 2026, after Putin's visit to Beijing, Russia issued its second tranche of sovereign bonds denominated in yuan: 10 billion yuan (approximately $1.5 billion) in 10-year bonds with a 7.65% coupon, 70% of which were settled in yuan. This is not trivial: it means Moscow is beginning to go into debt in Chinese currency, creating a monetary dependence on Beijing that adds to the already existing trade and energy dependence. Russia is transitioning from a dependence on the dollar to a dependence on the yuan — and that is exactly what Beijing wants.

The CEPA report also highlights the degradation of Russian economic fundamentals: a budget deficit at 2.6% of GDP in 2025, a sovereign wealth fund at risk of being emptied within the year, rampant inflation, and high interest rates that discourage private investment. Russia cannot raise debt on international financial markets, and Chinese capital is arriving in trickles. De-dollarization has offered Moscow a lifebuoy, but not a lifeboat.

There is something almost tragic in the Russian economic trajectory. Putin has sacrificed everything — his country's economy, the lives of his soldiers, Russia's international reputation — for a war of aggression against Ukraine. And in the end, he has created an unprecedented dependence on China, a partner watching him weaken with a calculating smile. Ukraine resists. Russia grows poorer. And Beijing reaps the rewards.

SWIFT under pressure: the reforms that lag behind

Faced with the rise of CIPS and progressive de-dollarization, what is the West's response? It is, it must be said, insufficient to the height of the challenge. SWIFT remains the dominant system — by far — but its model is that of an infrastructure built for a world without serious competitors. Reforms to make it faster, cheaper, and more accessible have advanced, but slowly. Secondary sanctions are Washington's main lever to deter foreign banks from facilitating Russian transactions, and they work partially — as seen with the large Chinese banks showing caution.

But the logic of secondary sanctions has intrinsic limits: it forces third countries to choose between their trade relations with the United States and their relations with Russia. For some, like Turkey, the Emirates, or Bangladesh, this choice is increasingly difficult to decide in favor of Washington. And every country that slides toward the yuan or the ruble to bypass American pressure is a symbolic victory for Beijing, which can say to its partners: "See, we offer a credible alternative."

Trump, unpredictability and the weakening of the dollar-system

There is a cruel irony in the fact that it is the very unpredictability of Donald Trump that has accelerated de-dollarization. By threatening to bomb Iran in April 2026, by imposing tariffs across the board, and by waving the specter of exclusion from SWIFT as a variable-geometry political tool, Trump has offered Beijing the perfect argument to convince hesitant countries to diversify their payment systems. CIPS set its daily volume record the day after his threats against Tehran. This is not a coincidence — it is a structural correlation. The more Washington appears unpredictable, the more attractive the yuan alternative becomes.

Trump may be, for the West, a necessary evil on some issues — his rhetorical firmness toward China and Iran has its merits, and his military support for Ukraine, though erratic, remains irreplaceable. But his weaponization of the dollar as a variable-geometry political tool constitutes one of America's greatest strategic errors in a generation. It gives Beijing exactly the arguments it needs to legitimize its strategy of monetary weaponization.

I recognize that Trump is capable of toughening the tone toward China in a way his predecessors didn't dare. But weaponizing the dollar as a variable-geometry political tool — sanctioning an ally one day, threatening a neutral country the next — is sawing off the branch on which the entire Western financial architecture rests. The dollar's hegemony relies on trust. And trust does not tolerate erraticism.

The platform the IMF doesn't want to see grow

The mBridge project is perhaps the most structurally threatening initiative for the Western financial system, precisely because it operates on the terrain of central bank digital currencies — a terrain where the West has not yet seriously positioned itself. Initially developed with the Bank for International Settlements (BIS), the platform continued after the BIS's withdrawal with China, the United Arab Emirates, Saudi Arabia, Thailand, and Hong Kong. In January 2026, the cumulative volume of mBridge had reached $55.49 billion — a 2,500-fold increase compared to the 2022 pilots. The digital yuan represents more than 95% of total volume.

It is not yet at the scale of SWIFT, but the trajectory is dizzying. And on February 1, 2026, China modified CIPS rules to allow settlements in currencies other than the yuan — notably the Hong Kong dollar. This is a seemingly technical opening that actually means CIPS intends to become a multi-currency infrastructure, not just a tool for promoting the yuan. If this evolution is confirmed, the gap with SWIFT will narrow much faster than current analyses predict.

The digital euro and the European delay

Meanwhile, Europe is stammering. The digital euro is not yet deployed on a large scale. The ECB is progressing, but slowly, with endless debates on privacy, holding caps, and the impact on banking stability. China, meanwhile, opened a digital yuan hub in Shanghai in September 2025, has made the e-CNY interest-bearing at the deposit rate since January 2026, and is extending its cross-border settlement links with Indonesia, the Middle East, and other partners. The ECB's 2026 report on the international role of the euro is honest on this point: China is moving on digital currency technology at a speed that Europe has not yet reached.

Europe, however, has structural assets that the ECB report also highlights: in 2025, the euro became the first currency for issuing sustainable and green bonds, surpassing the dollar for the first time, with a market share of more than 41%. Institutional trust in the euro, the depth of European capital markets, regulatory transparency — all are advantages that the yuan cannot match as long as China maintains its capital controls and the opacity of its financial markets.

I am sincerely concerned by Europe's technological lag in digital currency. This is not a sexy subject — no one mobilizes around the architecture of interbank payment systems. But if in five or ten years mBridge and the e-CNY are the standards for trade in Asia, Africa, and the Gulf, the euro will be marginalized precisely where Europe most needs to carry weight.

Why Ukrainian victory is also a monetary victory

One might wonder what the link is between the war in Ukraine and interbank settlement mechanisms in yuan. The link is direct and fundamental. Ukrainian resistance is the only thing keeping real pressure on Russia — on its human resources, its industrial capabilities, and its national morale. If Moscow were to win militarily, the narrative would change radically: proof would be established that brutal force prevails over economic sanctions, and that the Russo-Chinese alternative financial infrastructure worked. This would be a devastating signal for all authoritarian regimes still hesitant to turn to the yuan.

Conversely, the longer the war drags on — and the more Russia weakens economically — the more Beijing's geofinancial project is exposed to its own contradictions. A financially bloodless Russian partner is less useful to China than a stable one. Zelensky, by holding firm against Russian aggression, forces Putin to consume resources that China only partially replaces. It is a war of attrition that extends far beyond the battlefield: it extends to the reserves of the Russian sovereign wealth fund, to Moscow's ability to finance its debt, and to the stability of the ruble.

Western support for Kyiv is also monetary defense

Every dollar, every euro, every weapons system sent to Kyiv is not just an act of solidarity with an attacked democracy — it is also an investment in the resilience of the Western financial system. A Russia that wins in Ukraine is a Russia that demonstrates that sanctions do not work, that de-dollarization keeps its promises, and that the West has lost its credibility as the guarantor of international order. This scenario would be a catastrophe for trust in the dollar and in SWIFT, precisely because it would validate Beijing's strategy.

The political and financial costs of supporting Ukraine are real. But they are tiny compared to the cost of a collapse of the credibility of the Western financial architecture. This is not just a war for Ukraine's borders — it is a war over who writes the rules of the world economy in the second half of the 21st century.

I often think about what Ukrainian civilians are living through in Kharkiv, Odesa, Zaporizhzhia — and it is difficult for me to reduce their courage and suffering to a discussion about interbank payment systems. But the two are linked. Ukraine's resistance costs Putin what neither the yuan nor any alternative system can repay him: men, munitions, and legitimacy. And that matters.

Russia forced to go into debt in Chinese currency

The May 2026 issuance of Russian sovereign bonds denominated in yuan deserves deep analysis, as it reveals a fundamental power asymmetry in the Sino-Russian relationship. When a sovereign state issues debt in the currency of another state, it implicitly accepts the latter's financial dominance. If the yuan depreciates, Russia "wins" in real terms. But if the yuan appreciates — a trend observed in 2026, with the yuan trading around 6.78 yuan to the dollar, strengthening compared to previous years — Moscow will have to shell out more rubles to honor its commitments.

More deeply, this dependence creates asymmetric dependence for Beijing. If China decided one day to no longer renew swap lines, to tighten credit conditions, or to slow its purchases of Russian bonds, the impact on Russian public finances — already under strain with a deficit at 2.6% of GDP and an exhausting sovereign wealth fund — would be immediate and painful. This is exactly what economists call asymmetric dependence: Russia needs China far more than China needs Russia.

Power of Siberia 2: energy as an additional monetary lever

In May 2026, Moscow and Beijing signed a binding memorandum for the construction of the Power of Siberia 2 gas pipeline, capable of transporting 50 billion cubic meters of gas per year from Siberia to northern China via Mongolia, for a duration of 30 years. All operations will be settled in yuan, outside the Western financial system. This is the final nail in the coffin of a Russian energy diversification that never really existed: Moscow, after losing the European market, finds itself captive to the Chinese market — at the price, on the terms, and in the currency that Beijing decides.

For China, it is a strategic triumph: it ensures a secure energy supply at a competitive price, paid in its own currency, while strengthening international demand for yuan — since Russia will have to convert its gas exports into yuan, mechanically increasing yuan liquidity in global energy markets. The Gulf petro-monarchies are watching all of this closely.

Power of Siberia 2 feels to me like a trap that Putin built himself and into which he walks with his eyes open. For someone who presents himself as the defender of Russian sovereignty, tying himself to China for 30 years of gas exports on Sino-centric terms seems to me the exact definition of a consensual vassalage. The irony is almost tragic — if it didn't have such a human cost for the Ukrainians.

Figures that reassure — and those that worry

Let's put things in perspective. The US dollar still represents 59% of global official central bank reserves and is present in 88% of global foreign exchange transactions. SWIFT continues to dominate international payments. The US Treasury bond markets remain the ultimate refuge in case of global crisis — and this reality was confirmed during the episodes of geopolitical tension in 2025-2026. The dollar is not dying. There is no credible alternative on the global scale visible on the horizon.

But the convenience yield on US Treasuries — the premium investors pay to hold US debt due to its liquidity and safe-haven status — has slightly receded. The dollar's share in global reserves was at 71% in 2001: it is now at 59%. This is a 12 percentage point drop in 25 years — slow, but structural. And the share of gold in official global reserves reached 27% at the end of 2025, surpassing both the euro and Treasuries for the first time, reflecting a deliberate diversification by central banks that no longer trust a single system.

The 2022 precedent and the fear of asset freezing

What really changed in 2022 was the perception of sovereign risk associated with the dollar. Before the freezing of 300 billion in Russian reserves, almost all governments in the world considered that their assets denominated in dollars and held in the Western system were, by definition, safe. This assumption has been shattered. The central banks of countries that have no sympathy for Putin but have their own disputes with Washington — think China, India, Saudi Arabia, Brazil — have understood that what happened to Russia could happen to them. The signal sent was not "we can punish Russia" — it was "we can punish anyone."

It is this precautionary calculation — far more than enthusiasm for the yuan — that explains the increase in gold purchases by central banks (2,175 tons in 2025, an absolute historical record), the rise of CIPS, and the discreet but tenacious development of alternative systems to SWIFT in a dozen Global South countries. Dollar hegemony survived 2022, but it lost something it will not easily recover: absolute trust in its impartiality.

I understand the arguments of those who say the sanctions against Russia were necessary — they were, and I fully support them. But I think the tool was used without a complete analysis of its second-order effects. The freezing of those 300 billion in reserves was a signal for the entire world, not just for Moscow. And that signal continues to produce its effects, far beyond what Washington had calculated.

Hong Kong, Dubai, Istanbul: the hubs of circumvention

The Sino-Russian de-dollarization does not function exclusively through official and transparent channels. A significant portion of transactions — particularly those involving dual-use goods or components likely to fuel the Russian war effort — transit through informal circuits that deeply concern Western intelligence agencies. Hong Kong, Dubai, and Istanbul have become the hubs of what analysts call the "shadow banking" of de-dollarization: specialized payment agents, holdings registered in neutral jurisdictions, and internal bank clearings that net incoming and outgoing transactions to obscure their origin.

These circuits are not on the margins — they have become the operational heart of Sino-Russian trade where major Chinese state banks refuse to expose themselves. And they generate considerable profits for the intermediaries who accept the risk. The problem for Washington and Brussels is that sanctioning these networks is infinitely more difficult than cutting Moscow off from SWIFT: they are diffuse, mobile, and operate in jurisdictional gray zones.

Alarm signals from Western oversight institutions

The Financial Action Task Force (FATF), the US FinCEN, and European financial intelligence units regularly publish alerts on these circumvention circuits. But enforcement capability remains limited. The United States imposed secondary sanctions on several Turkish, Emirati, and Kazakh banks in 2024-2025, with mixed results: some reduced their activities, others simply migrated to newly created entities. The cat-and-mouse game between Western oversight authorities and bypass circuits is structurally asymmetrical: regulators must detect everything, circumventionists only need a single crack.

This reality forces the West to rethink its approach to financial sanctions. Not to abandon them — they have a real effect on Russian costs — but to complement them with an industrial and technological policy that makes dependence on the Western system more attractive than its circumvention. The best defense of the dollar's architecture is not to make it more coercive — it is to make it more efficient, fairer, and more indispensable.

I sometimes wonder if our governments truly understand the scale of the problem of parallel circuits. One bank is sanctioned, and two new ones appear. One channel is blocked, and three others open. This is not a battle that can be won solely with blacklists. We need a positive strategy, not just a defensive one.

Indicators of a real rise in power

The 2026 figures paint a portrait of the yuan accelerating on several fronts. The yuan's share in global trade financing reached approximately 8% in March 2026, up from 5.5% in 2024 — an increase of 2.5 points in less than two years. The yuan has become the second trade financing currency on a global scale. panda bonds issuances (bonds issued on the Chinese market by foreign issuers) reached a record of 136.5 billion yuan in the first five months of the year, up 90.3% year-on-year — with issuers like Pakistan, Kazakhstan, and other strategic partners of Beijing.

In the foreign exchange market, the yuan now represents about 9% of global foreign exchange transactions in 2025 according to BIS data. It is still very far from the 88% involving the dollar, but it is more than the euro in many non-European corridors. And where SWIFT statistics show the yuan falling below 3% in April 2026, analysts point out that these data ignore all transactions settled outside of SWIFT — via CIPS, bilateral swaps, and direct settlements between partner banks. The real size of the yuan market is therefore significantly underestimated by traditional metrics.

Structural obstacles still holding back the yuan

But the yuan has structural limits that fundamentally distinguish it from the dollar and the euro. The first and most important: capital controls that China maintains on its currency. A foreign investor who holds yuan cannot freely convert them, transfer them without restrictions, or use them to buy Chinese financial assets without authorization. This fundamentally limits the international liquidity of the yuan and explains why foreign central banks hesitate to make it a pillar of their reserves.

The second limit: the predictability and transparency of Chinese monetary policy. The yuan is managed — some would say manipulated — by the People's Bank of China in an opaque way. Investors who hold yuan take the risk of a discretionary unilateral devaluation without a recourse mechanism. It is the opposite of the institutional trust that is the strength of the dollar and the euro. As long as Beijing maintains these controls and this opacity, the yuan cannot claim the status of a world reserve currency in the full sense of the term.

Here is the fundamental paradox of the yuan as a weapon: it is effective precisely because it is controlled by an authoritarian state capable of making fast and coordinated decisions. But it is for the exact same reason that it cannot become a real world reserve currency — because trust in a reserve currency requires independent institutions, open markets, and a rule of law that Xi Jinping's China is not prepared to concede. The yuan is a formidable weapon. But a weapon is not a universal currency.

What the Sino-Russian de-dollarization truly reveals

The Sino-Russian de-dollarization — with its 90% to 99.1% of transactions outside the dollar depending on the sources and definitions used, its $227.9 billion in trade in 2025, its fast-growing CIPS infrastructure, and its digital yuan in accelerated deployment — is not the end of the dollar. It is the end of an era where the West could assume that its monetary architecture was safe from any serious challenge. What Beijing has built since 2022, with Russia as an involuntary guinea pig, is a proof of concept: it is possible to trade on a large scale, bypassing SWIFT and the dollar, in a viable way. This message has been received by dozens of capitals observing the experiment with interest.

The issue is no longer whether the yuan will replace the dollar tomorrow. It will not replace it tomorrow. The issue is whether the West will allow, through indifference or arrogance, the establishment of a parallel financial ecosystem robust enough to offer authoritarian regimes — and their hesitant partners — a long-term viable alternative. This would be a historic error of the first magnitude.

What the West must do — now

The response requires several simultaneous fronts. First, hold in Ukraine — because every week that Kyiv holds is a week where the proof of concept for de-dollarization remains imperfect, costly, and exposed to its contradictions. Second, accelerate reforms of SWIFT and the international payment system to make it more accessible, faster, and less perceived as a unilateral American political tool. Third, deploy the digital euro before mBridge and the e-CNY create standards that Europe will be forced to catch up to. And finally, use sanctions not in an erratic and unpredictable way, but with a strategic coherence that preserves trust in the system rather than eroding it.

The yuan as a weapon is only formidable if the West lets down its guard. The liberal financial architecture has considerable assets — market depth, rule of law, capital freedom, central bank independence — that neither China nor Russia can replicate in the short term. The question is whether Western democracies will have the political will to defend these assets with the same determination that Beijing uses to challenge them.

By Maxime Marquette, columnist

Editorial stance

I am not a journalist but a columnist and analyst. My expertise lies in observing and analysing the geopolitical, economic and strategic dynamics that shape our world. My work is to take political strategies apart, to understand global economic movements, to put the decisions of international actors in context and to offer analytical perspectives on the changes that are redefining our societies.

I do not claim the cold objectivity of traditional journalism, which stops at reporting facts. I claim analytical clarity, rigorous interpretation and a deep understanding of the complex issues that concern us all. My role is to give meaning to the facts, to place them in their historical and strategic context, and to offer a critical reading of events.

Method and sources

This text keeps the basic distinction between verified facts and interpretive analysis. The rule never changes: a factual claim is published only when a verifiable source supports it, and the sources this article actually used are listed under Sources, never here.

Primary source families used by the publication, when the story has them: official statements from governments and international institutions, public statements by political leaders, reports from intergovernmental organisations, dispatches from recognised international news agencies.

Secondary source families: specialised publications, internationally recognised news media, analyses from established research institutions, reports from industry organisations.

When an article cites statistical, economic or geopolitical data, it comes from the institutions that produce it (intergovernmental organisations, central banks, national statistics offices), and the exact institution is named under Sources.

Nature of the analysis

The analyses, interpretations and perspectives in the analytical sections of this article are a critical, contextual synthesis based on the information available, the trends observed and the expert comments cited in the sources consulted.

My role is to interpret these facts, to set them in the context of today's geopolitical and economic dynamics, and to give them a coherent meaning within the larger story of the changes shaping our time. These analyses reflect expertise built through continuous observation of international affairs and an understanding of the strategic mechanisms that drive global actors.

This article describes a documented state of affairs on its publication date, not a prediction: later developments may shift its outlook. No update is promised in advance; when an article is corrected or completed, the change is dated in the text.