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Opinion
Matthew Brooker

The Dollar System Is China’s Hotel California

Beijing checked out long ago. It just can’t leave.

It’s a dark desert highway to the global yuan.

It’s a dark desert highway to the global yuan.

Photographer: Ethan Miller/Getty Images

It’s an idea that won’t lie down. U.S.-led sanctions against Russia and the threat that they could ensnare China will prompt Beijing to elevate the international role of the yuan, potentially marking a turning point for the global financial order. Dream on. The structural impediments to the Chinese currency challenging the dollar’s dominance are so great that it’s surprising the notion has received even cursory consideration.

China is starting to use its own currency more for trade transactions, buying coal and oil from Russia and holding talks to price crude purchases from Saudi Arabia in yuan. The country has developed its own cross-border payment system, known as CIPS, as an alternative to the U.S.-dominated Society for Worldwide Interbank Financial Telecommunication, or SWIFT. And the People’s Bank of China is expanding use of its digital yuan. None of these, though, change the fundamental equation that constrains the yuan’s development into a global reserve currency with the power to challenge the dollar.