Senior economists in Asia suggest that China’s yuan could potentially challenge the declining US dollar as a global currency, particularly if Beijing allows greater foreign access and conversion.
China is aiming to boost the international use of its centrally controlled currency, which is already being utilized in cross-border trade, according to Hoe Ee Khor, chief economist at the Singapore-based ASEAN+3 office of macroeconomic research.
Khor remarked, “American exceptionalism is over—the beginning of the end.” He elaborated that the US dollar is losing its status as the go-to safe currency, while the yuan is emerging as a viable alternative.
However, Khor emphasized that for the yuan to effectively compete with the dollar, foreign investors must have access to various financial instruments like stakes and bonds. He mentioned that introducing new assets would also play a vital role in this process.
He pointed to existing frameworks like the connection scheme in Hong Kong, where foreign investors can buy mainland Chinese bonds and stocks without requiring a special license.
Despite this progress, concerns about currency conversion persist for investors outside of mainland China, Khor noted.
