Renminbi and US dollar banknotes are captured in Fuyang City, Anhui Province, China, on March 1, 2026. (Photo by Costfoto/NurPhoto via Getty Images)
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Every June, policymakers, regulators, bankers, investors, and financial executives gather in Shanghai for the Lujiazui Forum, China‘s premier financial policy conference. If Davos is where global elites discuss the future of the world economy, Lujiazui is increasingly where Beijing signals how it intends to shape that future to serve its own interests. As Americans, despite all the ways that our current focus is divided, I believe that this year’s forum deserves our attention.
At this year’s Lujiazui Forum, Chinese officials unveiled a series of measures designed to expand offshore renminbi (RMB) finance, deepen Shanghai’s role as an international financial center, create new liquidity facilities for foreign central banks and sovereign investors, expand cross-border RMB trading, and further open portions of China’s financial sector to international participation.
It is true that we have heard much of this before and, for skeptics and many observers, it is understandable if there are doubts about its sincerity or achievability. Is China finally ready and serious about posing a challenge to the U.S. dollar? The answer is that China is unquestionably serious about challenging aspects of dollar dominance, but it is also the wrong question.
I would argue that the world’s focus should not be on whether China will achieve its very real goal of having the renminbi replace the dollar. The world should focus more on the fact that Beijing continues, bit by bit and step by step, to methodically build the financial infrastructure necessary to reduce its dependence on a dollar-centric global system and create alternatives to American 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 contender and disruptor of dollar dominance.
This is not primarily a monetary story. It is a geopolitical one.
For nearly eighty years, the United States has enjoyed extraordinary advantages from the dollar’s central role in the global financial system. Dollar dominance has provided Washington with tools of statecraft that previous great powers could scarcely imagine. The United States can impose sanctions, restrict access to dollar clearing, shape international compliance standards, influence capital flows, and leverage its position within the world’s 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, it is in a better position than ever before to do something about it.
Two-decade renminbi internationalization plan reaches new stage
The Chinese leadership has spent nearly two decades attempting to internationalize the renminbi. Beginning in the aftermath of the 2008 global financial crisis, Beijing launched RMB trade settlement programs, established offshore clearing centers, expanded currency swap arrangements, developed alternative payment infrastructure, and gradually opened portions of its capital markets.
It has not been a silver bullet capable of displacing or weakening dollar dominance. But the story of China is rarely about immediacy and swiftness. It is about methodical determination and incremental advancement. The latest measures announced at Lujiazui are simply the newest chapter in that longer story. What makes this year’s announcements particularly noteworthy is that they coincide with the first year of implementation of China’s 15th Five-Year Plan. China is not wasting any time in getting this plank of the plan off to a robust start, and that matters.
Western observers sometimes view Chinese planning documents as aspirational wish lists, propaganda documents, or collections of ambitious ideas generated on a whiteboard. Beijing views 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 level of a national strategic objective. Chinese leaders have repeatedly described 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 RMB internationalization.
Importantly, these objectives are no longer merely discussion topics among Chinese economists. They are now embedded within China’s primary national planning document, which means regulators, state-owned banks, provincial governments, and financial institutions can all be expected to align resources and policy decisions in support of these goals. Whether these efforts ultimately succeed is an important question. However, what is not in question is whether Beijing intends to pursue them relentlessly and aggressively.
Wall Street dismisses the threat at its own peril
The world has seen this movie before. Many Western analysts initially dismissed the ambitions associated with Made in China 2025. Critics pointed to technological deficiencies, market distortions, misallocation of capital, inefficient state intervention, corruption, and questions about implementation. All these concerns were reasonable at the time. Yet Beijing continued to move forward slowly but deliberately, implementing industrial policy, increasing subsidies, directing banks to deploy state 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 perfection. But it was sufficient enough to help China establish globally significant positions across numerous strategic sectors. Indeed, many will recall that it was the growing success of Made in China 2025 that helped trigger the first Trump administration’s 2018 trade war. The lesson is not that Beijing always succeeds or does so quickly. The lesson is that Beijing rarely abandons strategically important objectives once they become embedded in national planning documents and long-term competition strategy.
This reality deserves more attention in Washington, in Silicon Valley, and in particular on Wall Street. Many investors will understandably view the Lujiazui announcements as a positive development. Expanded offshore RMB trading, new liquidity facilities, deeper bond markets, and greater access to Chinese financial products create opportunities for global capital. Yet investors should be careful not to confuse these moves with a China that intends to fully open its capital account and allow capital flows to move solely according to 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 intended to reduce China’s exposure to U.S. financial leverage and create greater strategic freedom of action in pursuing its interests on the international stage. As a result, the geopolitical risks surrounding China-related financial exposure are likely to increase, not decrease.
One-year performance in the US Dollar-Chinese Renminbi currency trade.
Currently, the Congressional China hawks are silent — or silenced by Trump. In private, they will tell you that they don’t like his China policy, but they won’t openly say it. But Congress is unlikely to remain on the sidelines indefinitely. During the Biden administration, Congress demonstrated growing interest in outbound investment screening, pension fund exposure, index provider decisions, and the role of American capital in supporting Chinese firms linked to strategic industries. Outbound investment screening remains unfinished business in Washington, and future efforts to expand screening authorities could place greater scrutiny on U.S. financial participation in Chinese markets.
Should Democrats regain control of the House, or should Republican China hawks regain political momentum, lawmakers could revive aggressive legislation focused on strategic competition with China. Oversight of Wall Street’s China exposure would almost certainly be part of that conversation.
Senator Elizabeth Warren has repeatedly raised concerns regarding financial engagement with China. At the same time, Republican China hawks continue to advocate, often quietly, for tougher restrictions on capital flows into sectors viewed as supporting Chinese military modernization or strategic competition. The result is an unusual bipartisan convergence. Progressive skeptics of the U.S. national security establishment and national security hawks often disagree on almost everything. Increasingly, skepticism regarding certain forms of financial engagement with China is one of the few areas where their interests overlap.
Outside the United States, however, many countries are likely to welcome the news coming out of Shanghai. Recent geopolitical events may accelerate China’s efforts and increase their appeal across the Global South, the Middle East, and even among some allies and partners such as Canada and several ASEAN states. The Iran conflict, concerns regarding sanctions enforcement, disputes surrounding U.S. trade policy, and broader questions about the future of globalization and dollar weaponization have encouraged many governments to seek greater strategic flexibility. The erratic and often aggressive actions of the Trump administration have caused concern about excessive dependence on any single financial system.
That does not mean countries wish to abandon the dollar altogether. Nor does it mean they want to become dependent on China. Many remain deeply skeptical of Beijing and its intentions. What it does mean is that many now view a hedge, an alternative, as more attractive than at any point in the past eighty years. China understands this, and that is precisely why Beijing sees a wider window of opportunity. China does not need the renminbi to replace the dollar in order to achieve a strategic victory. In fact, Beijing’s objective may be considerably more modest and therefore more achievable: creating enough alternatives that countries no longer feel compelled to rely exclusively on the dollar-based system. It only needs enough countries, institutions, and investors to maintain a viable alternative.
A world in which a meaningful share of trade, energy transactions, sovereign reserves, development finance, and cross-border payments can operate outside traditional dollar channels is strategically different from the world that existed just a decade ago. That possibility is the real significance of the announcements made in Shanghai at the Lujiazui Forum. The question facing Washington is therefore not whether the renminbi will become the next dollar. The question is whether the U.S. is paying sufficient attention to a competitor that has formally declared its intention to become a financial powerhouse and appears prepared to devote the next five years to making that ambition a reality.
—By Dewardric McNeal, managing director and senior policy analyst at Longview Global, and a CNBC contributor
