Renminbi and US dollar banknotes are captured in Fuyang city, Anhui province, China, March 1, 2026. (Photo by Costfoto/NurPhoto via Getty Images)
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Every June, policymakers, regulators, bankers, investors and financial leaders gather in Shanghai for the Lujiazui Forum, Chinathe first conference on financial policy. If Davos is the place where global elites discuss the future of the global economy, Lujiazui is increasingly the place where global elites discuss the future of the global economy. Beijing indicates how it intends to shape this future to serve its own interests. As Americans, despite all the current divisions in our priorities, I believe this year’s forum deserves our attention.
HAS this year’s Lujiazui ForumChinese officials unveiled a series of measures aimed at expanding offshore renminbi (RMB) financing, strengthening Shanghai’s role as an international financial center, creating new liquidity facilities for foreign central banks and sovereign investors, expanding cross-border RMB trading and further opening parts of China’s financial sector to international participation.
It is true that we have already heard a lot about this and, for skeptics and many observers, it is understandable that there are doubts about its sincerity or feasibility. Is China finally ready and serious to challenge the American dollar? The answer is that China is undoubtedly serious about challenging aspects of dollar dominance, but that is also the wrong question.
I would argue that the world’s attention should not be on whether China will achieve its very real goal: having the the renminbi replaces the dollar. The world should focus more on Beijing continuing, bit by bit and step by step, to methodically build the financial infrastructure needed to reduce its dependence on a dollar-centric global system and create alternatives to U.S. financial power for other countries. In other words, China is serious, but it may not be able to achieve its goals, at least not quickly. What it is doing, however, is positioning itself as a serious competitor and disruptor to the dominance of the dollar.
It is not primarily a monetary story. It’s a geopolitical question.
For nearly eighty years, the United States has enjoyed extraordinary benefits from the dollar’s central role in the global financial system. The dominance of the dollar has provided Washington with tools of governance that previous great powers could barely imagine. The United States can impose sanctions, restrict access to dollar clearing, shape international compliance standards, influence capital flows and take advantage of your position within the global financial architecture to advance national security objectives. China understands this reality as well as anyone and, like many countries, has bristled at this enormous concentration of power for decades.
Today, he is better placed than ever to act.
Two-decade renminbi internationalization plan reaches new milestoneChinese leaders have spent nearly two decades trying to internationalize the renminbi. In the wake of the 2008 global financial crisis, Beijing launched RMB trade settlement programs, established offshore clearing centers, expanded currency swap agreements, developed alternative payments infrastructure, and gradually opened parts of its capital markets.
This is not a silver bullet capable of displacing or weakening the dominance of the dollar. But Chinese history is rarely about immediacy and speed. It’s about methodical determination and incremental advancement. The latest measures announced in Lujiazui are only the new chapter in a long story. What makes this year’s announcements particularly notable is that they coincide with the first year of implementation of the China’s 15th Five-Year Plan. China is wasting no time in getting this element of the plan off to a good start, and that is important.
Western observers sometimes view Chinese planning documents as aspirational wish lists, propaganda documents, or collections of ambitious ideas generated on a whiteboard. Beijing sees them differently. Five-year plans are not marketing brochures. They are resource allocation documents that shape regulatory priorities, guide state-owned enterprises, influence lending decisions, direct provincial governments, and signal strategic priorities throughout the Chinese system.
It is therefore important to remind policymakers, investors and businesses that the new 15th five-year plan elevates finance to the rank of a national strategic objective. Chinese leaders have repeatedly outlined the goal of building China into a “financial powerhouse”, strengthening Shanghai and Hong Kong as international financial centers, expanding offshore RMB markets, improving cross-border payment infrastructure, and steadily advancing the internationalization of the RMB.
It is important to note that these objectives are no longer mere topics of discussion among Chinese economists. They are now integrated into China’s main national planning document, meaning regulators, state-owned banks, provincial governments and financial institutions can all align their resources and policy decisions to support these goals. Whether these efforts will succeed is an important question. However, there is no doubt that Beijing intends to pursue them relentlessly and aggressively.
Wall Street rejects the threat at its perilThe world has already seen this film. Many Western analysts initially rejected the ambitions associated with Made in China 2025. Critics have pointed to technological deficiencies, market distortions, misallocation of capital, ineffective state intervention, corruption and implementation issues. All of these concerns were reasonable at the time. Yet Beijing has continued to move slowly but deliberately, implementing industrial policy, increasing subsidies, ordering banks to deploy public financing, establishing aggressive procurement preferences, focusing universities on training engineering and technology talent, and providing preferential regulatory support in pursuit of its goals.
The result was not perfect. But it was enough to help China establish significant positions globally in many strategic sectors. Indeed, many will recall that it was the growing success of Made in China 2025 that helped spark the first Trump administration’s trade war in 2018. The lesson is not that Beijing always or quickly succeeds. The lesson is that Beijing rarely abandons its strategically important objectives once they are integrated into national planning documents and long-term competition strategy.
This reality deserves more attention in Washington, in Silicon Valley and especially on Wall Street. Many investors will naturally view Lujiazui’s announcements as a positive development. The expansion of offshore RMB trading, new liquidity facilities, deeper bond markets and greater access to Chinese financial products are creating opportunities for global capital. Investors should be careful, however, not to confuse these measures with China intending to fully open its capital account and allow capital flows to evolve solely based on market fundamentals.
China is not pursuing these reforms simply to please Wall Street or to prove that it has become a financially liberal economy. Rather, these measures are aimed at reducing China’s exposure to US financial leverage and creating greater freedom of strategic action in pursuing its interests on the international stage. As a result, geopolitical risks surrounding China-related financial exposure will likely increase, not decrease.
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One-year performance in foreign exchange trading between the US dollar and the Chinese renminbi.
Currently, hawks in China Congress remain silent – or silenced by Trump. Privately they will tell you they don’t like his China policy, but they won’t say it openly. But Congress is unlikely to stay on the sidelines indefinitely. Under the Biden administration, Congress has demonstrated growing interest in oversight of overseas investments, pension fund exposure, index provider decisions, and the role of U.S. capital in supporting Chinese companies linked to strategic sectors. Oversight of overseas investments remains unfinished business in Washington, and future efforts to expand supervisory authorities could bring closer oversight over U.S. financial participation in Chinese markets.
If Democrats regain control of the House, or if Republican China hawks regain political momentum, lawmakers could revive aggressive legislation focused on strategic competition with China. Monitoring Wall Street’s exposure to China would almost certainly be part of that conversation.
Senator Elizabeth Warren has repeatedly expressed concerns about financial engagement with China. At the same time, China Republican hawks continue to argue, often quietly, for tighter restrictions on capital flows to sectors seen as supporting Chinese military modernization or strategic competition. The result is an unusual bipartisan convergence. The American establishment’s progressive national security skeptics and national security hawks often disagree on almost everything. Increasingly, skepticism about certain forms of financial engagement with China represents one of the few areas where their interests overlap.
However, outside of the United States, many countries will likely welcome the news from Shanghai. Recent geopolitical events could accelerate China’s efforts and increase its appeal in the South, the Middle East and even with certain allies and partners such as Canada and several ASEAN states. The Iranian conflict, concerns over sanctions enforcement, disputes over U.S. trade policy, and broader questions about the future of globalization and the weaponization of the dollar have encouraged many governments to seek greater strategic flexibility. Ac The Trump administration’s erratic and often aggressive actions have raised concerns about overreliance on a single financial system.
This does not mean that countries want to abandon the dollar completely. Nor does it mean that they want to become dependent on China. Many remain deeply skeptical of Beijing and its intentions. What this means is that many today view blankets, an alternative, as more attractive than at any time in the past eighty years. China understands this, and that is precisely why it sees a wider window of opportunity. China does not need the renminbi to replace the dollar to achieve strategic victory. In fact, Beijing’s goal could be considerably more modest and therefore more achievable: creating enough alternatives that countries no longer feel obligated to rely exclusively on the dollar-based system. All it takes is a sufficient number of countries, institutions and investors to maintain a viable alternative.
A world in which a significant portion of trade, energy transactions, sovereign reserves, development finance and cross-border payments can take place outside traditional dollar channels is strategically different from the world that existed just a decade ago. This possibility is the real meaning of the announcements made in Shanghai at the Lujiazui Forum. The question in Washington is therefore not whether the renminbi will become the next dollar. The question is whether the United States is paying enough attention to a competitor that has officially declared its intention to become a financial power and appears ready to dedicate the next five years to making that ambition a reality.
—By Dewardric McNealmanaging director and senior policy analyst at Longview Global, and CNBC contributor
