Di Dongsheng, associate dean of the School of International Studies at Renmin University in Beijing, said recently that China is trying to use pandemic-caused economic shifts to challenge and replace the “dominance” of the US dollar in “global markets and trade,” in a February 4 video posted on Chinese social media.
“The currency that fixes the price will eventually be the renminbi (yuan),” stated Di. Last April, Di declared the Covid-19 pandemic an opportunity “unseen in 100 years,” an opportunity to make “all seven billion people in the world pay for [China].”
Di, who has “contributed to China’s foreign economic policy,” has regularly been a part of “policy discussions and overseas visits with various bodies of the Chinese regime, such as the foreign ministry.” Last year a video of his explicitly admitted the Chinese Communist Party (CCP) influences the US through “old friends” on Wall Street.
Di described why China wants to supersede the US dollar, the Epoch Times reports: “If the Chinese yuan (or renminbi) achieves global hegemony, Beijing will be in a position to print more money to dilute the value of yuan held by the world’s population—thus transferring wealth to China.”
Western low-interest rate policies (meant to counteract the pandemic’s economic damage) have benefitted China, as foreign investors have been buying up “China’s higher-yield bonds, pumping $135 billion into Chinese bonds in the 12 months ended Sept. 30, 2020.” Investors do “naturally divert funds away from low-interest rate economies” (the US currently) to high-interest rate economies (China). But the investor must sell dollars and buy yuans to purchase Chinese bonds.
Di advised in April 2020 that China ought to attract more foreign investors during the pandemic, using yuan to support foreign countries and companies suffering from the pandemic’s economic effects. He said “regulatory changes” could increase foreign investment too.
He also advised the CCP issue loans to developing countries so as to collect “high-interest payments to offset the cost of relatively high-interest rates China pays on its bonds.”
He even suggested China could sell its foreign exchange reserves in order to make such loans. Di said last April, “(Our laws) should make other countries believe that China won’t confiscate other countries’ assets; make them believe that they can buy whatever they want to buy if they transfer their money to China; make them believe that they can withdraw their money whenever they want.”
Di did admit possible problems for China from this policy, saying the potential issue with a “number of creditors is that it could push the yuan to strengthen too much and impair the regime’s ability to control the exchange rate… creditors will dial-up scrutiny of Chinese financial markets, leaving less room for the regime to manipulate it.” (China usually uses an artificially weak currency to “spur exports”.)
The CCP has been seeking to replace the US dollar as global reserve currency for some time: “In 2009, then-governor of the regime’s central bank, Zhou Xiaochuan, called for the U.S. dollar to be replaced with an international reserve currency so the yuan could exert more influence,” the Epoch Times says, adding, “According to the data compiled by the International Monetary Institute of Renmin University, the Chinese yuan’s share of global payments increased from 0.02 percent in 2011 to over three percent in 2020.”
The 2019 Foreign Investment Law (to protect foreign investors’ rights) caused a “surge of foreign investment” into China in 2020. The yuan still has some significant catching up to do to the US dollar, however, if the CCP is to achieve its goal.