What changes when China’s leader finally states a reserve currency ambition explicitly? Xi Jinping has now done so, calling for the renminbi to attain global reserve currency status, not in a speech to foreign investors or at an international summit, but in Qiushi, the Chinese Communist Party’s flagship ideological journal.

The language, drawn from a speech Xi delivered to senior regional officials in 2024, was published only recently. That timing is part of the signal. Qiushi is not a platform for trial balloons or external messaging. It is where the party formalizes priorities once internal consensus has formed, often well after an idea has circulated within the system. By placing these remarks there now, Beijing is signaling that what had long been discussed has moved into the category of settled direction. Xi did not merely endorse wider use of China’s currency. He called for building a “powerful currency” that is “widely used in international trade, investment and foreign exchange markets” and that can “attain reserve currency status.”

The immediate significance is not that reserve managers will reallocate at scale in response to a publication. It is that Xi has named a destination. In China’s policy system, explicit end goals discipline bureaucratic incentives and reshape what counts as success for regulators and financial institutions. It also changes how outsiders interpret incremental measures. A swap line, a clearing arrangement, or a new settlement channel can look like routine facilitation when the stated objective is convenience. It looks more strategic when reserve status becomes the benchmark.

A practical way to gauge where China stands in the international currency hierarchy is to locate the renminbi across the three classic functions of money: store of value, medium of exchange, and unit of account. China has advanced furthest where policy can steer usage and where firms have operational reasons to adopt. It has lagged where trust, exit, and legal predictability dominate.

As a store of value in official reserves, the renminbi remains small. IMF data show the renminbi share of allocated global foreign exchange reserves at 1.93 percent in 2025. This is not just inertia. Reserve managers prioritize deep markets, cheap hedging, and confidence that large positions can be liquidated and repatriated under stress. China’s capital account remains managed and convertibility is partial. These features may support domestic stability, but they complicate the case for large-scale reserve holdings.

As a medium of exchange, the renminbi is more visible. The Society for Worldwide Interbank Financial Telecommunication’s RMB Tracker reported that in Sept. 2025 the renminbi was the fifth most used currency for global payments by value, with a 3.17 percent share. The Federal Reserve’s 2024 review of renminbi internationalization adds a related indicator that links payments to commercial practice. It estimates the renminbi share of global trade finance near 6 percent in recent years, while the dollar accounts for about 84 percent. The pattern is consistent. The renminbi gains traction where China-linked trade, financing costs, and settlement logistics create recurring demand.

As a unit of account, progress is slower. Pricing and invoicing change only when firms can quote in a new currency without adding risk and when hedging markets and contract routines support the shift. A European Central Bank analysis finds that renminbi invoicing has grown in some regions but still accounts for under 2 percent of global exports. In practical terms, the renminbi is used more often to settle than to quote. That matters because unit of account use helps lock in currency usage through benchmarks and contracts, not only through payment flows.

These uneven outcomes reflect the design of China’s approach. It has not pursued a single liberalization moment. It has built channels that make renminbi settlement easier while keeping the broader system managed. The building blocks are mundane, but they are what change day-to-day currency behavior.

One pillar is liquidity backstopping through central bank swap lines. A 2024 official release reports that the People’s Bank of China has signed swaps with more than 40 foreign central banks or monetary authorities, with 31 agreements in force totaling about 4.16 trillion renminbi ($586 billion). Swap lines do not create deep renminbi asset markets. They reduce a concrete operational risk for counterparties that need renminbi liquidity for trade and financial stability. 

A second pillar is payment settlement infrastructure. China’s Cross-Border Interbank Payment System supports cross-border renminbi settlement and is designed to reduce frictions in renminbi payment workflows. Shanghai’s municipal government reported that the new payment infrastructure processed 175 trillion renminbi in cross-border payments in 2024, up 43 percent year-on-year, with cumulative processing around 600 trillion renminbi ($81.83 trillion) by the end of 2024. China’s payment system is not a full substitute for the broader global messaging and correspondent banking ecosystem, which still provides unmatched reach. Its significance is more practical, simplifying renminbi settlement for banks and firms in settings where China-linked trade is dense and where counterparties value having additional payment routes alongside.

A third pillar is targeted adoption in sectors where China’s commercial role is already central. Bloomberg reported that Chinese mining operators in Zambia began paying royalties and taxes in yuan, with payments starting in Oct. 2025. Zambia is not rewriting its monetary regime. The narrower implication is that a government revenue stream in a core sector is now partly denominated in renminbi, creating routine demand for clearing and treasury operations in the currency. Over time, these operational footholds can matter more than headline announcements because they make renminbi handling normal inside fiscal and banking workflows.

A fourth pillar addresses the unit-of-account problem through venues where renminbi pricing and hedging are possible. The Shanghai International Energy Exchange states that its crude oil futures contract is priced and traded in renminbi, physically settled, and open to overseas investors, with listing in March 2018. Such contracts do not automatically displace global benchmarks. They provide infrastructure for quoting and hedging in renminbi, which is a prerequisite for expanding unit-of-account use in any segment.

Put together, these measures point to a corridor strategy rather than a straight line toward reserve status. China builds liquidity options, settlement rails, and usable market venues where trade and financing ties are dense, then allows adoption to spread through convenience and habit. This approach can keep raising the renminbi’s medium of exchange role even if the store of value role remains constrained.

The remaining barrier is not usage. It is confidence in exit. A reserve currency is one that major holders believe they can hedge, sell, and convert quickly in a crisis without fearing that rules will shift when pressure mounts. The Federal Reserve notes that capital controls and exchange-rate management can weigh on internationalization because they raise the risk that divesting renminbi assets becomes difficult or costly precisely under stress.

Seen this way, the most consequential policy response is not necessarily to prevent renminbi usage from expanding, but to avoid misdiagnosing what that expansion represents. Much of China’s progress reflects transactional substitution rather than systemic displacement. Firms and governments are adopting the renminbi where it lowers costs, reduces exposure to disruption, or offers redundancy in payments and financing. Trying to suppress that usage directly would be difficult and, in many cases, counterproductive.

For U.S. and allied policymakers, the more important strategic question is how to preserve the attributes that make their currencies attractive under stress. As Benjamin J. Cohen, a longtime authority on global currency power, puts it, an international currency must “offer the qualities of exchange convenience and capital certainty – a high degree of transactional liquidity and reasonable predictability of asset value.” Monetary centrality has never been sustained by market share alone. It rests on confidence that legal protections hold, liquidity remains available, and capital can move even when geopolitical tensions rise. Policies that introduce uncertainty around access to liquidity or blur the line between targeted sanctions and broader financial coercion risk accelerating the diversification they are meant to deter.

At the same time, corridor-based internationalization deserves more attention than reserve statistics suggest. China’s strategy does not require persuading reserve managers in major financial centers to reweight portfolios. It works through supply chains, commodities, and regions where China is already a central commercial actor. In these settings, small shifts in settlement, invoicing, or financing can change what options firms and governments have when markets are under stress. Over time, many such changes can add up, quietly reshaping how the global financial system responds in a crisis even if headline reserve shares move only slowly.

There is also a deeper tradeoff embedded in any bid for reserve currency status that China cannot avoid. The dollar’s rise to preeminence required the United States to supply dollars to the rest of the world, largely by running persistent current account deficits and purchasing vast amounts of foreign goods. Over time, that role reshaped the U.S. economy, contributed to domestic distributional tensions, and constrained trade policy choices. Monetary centrality came with real economic and political costs.

If China were to pursue reserve status in earnest rather than rhetorically, it would face a similar constraint. Supplying the world with renminbi would require greater tolerance for outbound capital flows, wider currency circulation, and ultimately a willingness to import more than it exports. That runs against the export surpluses and growth model that have underpinned China’s economic strategy for decades. In this sense, reserve currency ambition is not just a matter of financial reform or credibility. It is a choice about what kinds of macroeconomic imbalances a country is prepared to accept.

This helps explain why China’s approach has remained incremental and corridor-based. Expanding transactional use allows Beijing to gain some of the benefits of currency reach while postponing the macroeconomic and political burdens that come with supplying a global reserve currency. Xi’s announcement makes that tension explicit. It raises the question of whether China is ultimately willing to accept those burdens or whether it will continue to seek influence without full exposure.

Xi’s statement does not resolve these tensions. China can keep expanding renminbi settlement and trade finance while maintaining a managed capital account, and that trajectory is already visible in specific corridors. But reserve status requires predictable rules and a credible right for outsiders to move money in and out when conditions deteriorate. The takeaway is clear. The renminbi can become more common in global commerce without becoming a true reserve currency. Whether China reaches that threshold will be decided by how Beijing governs access when markets tighten, not by what it declares when they are calm.

What changes when China’s leader finally states a reserve currency ambition explicitly? Xi Jinping has now done so, calling for the renminbi to attain global reserve currency status, not in a speech to foreign investors or at an international summit, but in Qiushi, the Chinese Communist Party’s flagship ideological journal.

The language, drawn from a speech Xi delivered to senior regional officials in 2024, was published only recently. That timing is part of the signal. Qiushi is not a platform for trial balloons or external messaging. It is where the party formalizes priorities once internal consensus has formed, often well after an idea has circulated within the system. By placing these remarks there now, Beijing is signaling that what had long been discussed has moved into the category of settled direction. Xi did not merely endorse wider use of China’s currency. He called for building a “powerful currency” that is “widely used in international trade, investment and foreign exchange markets” and that can “attain reserve currency status.”

The immediate significance is not that reserve managers will reallocate at scale in response to a publication. It is that Xi has named a destination. In China’s policy system, explicit end goals discipline bureaucratic incentives and reshape what counts as success for regulators and financial institutions. It also changes how outsiders interpret incremental measures. A swap line, a clearing arrangement, or a new settlement channel can look like routine facilitation when the stated objective is convenience. It looks more strategic when reserve status becomes the benchmark.

A practical way to gauge where China stands in the international currency hierarchy is to locate the renminbi across the three classic functions of money: store of value, medium of exchange, and unit of account. China has advanced furthest where policy can steer usage and where firms have operational reasons to adopt. It has lagged where trust, exit, and legal predictability dominate.

As a store of value in official reserves, the renminbi remains small. IMF data show the renminbi share of allocated global foreign exchange reserves at 1.93 percent in 2025. This is not just inertia. Reserve managers prioritize deep markets, cheap hedging, and confidence that large positions can be liquidated and repatriated under stress. China’s capital account remains managed and convertibility is partial. These features may support domestic stability, but they complicate the case for large-scale reserve holdings.

As a medium of exchange, the renminbi is more visible. The Society for Worldwide Interbank Financial Telecommunication’s RMB Tracker reported that in Sept. 2025 the renminbi was the fifth most used currency for global payments by value, with a 3.17 percent share. The Federal Reserve’s 2024 review of renminbi internationalization adds a related indicator that links payments to commercial practice. It estimates the renminbi share of global trade finance near 6 percent in recent years, while the dollar accounts for about 84 percent. The pattern is consistent. The renminbi gains traction where China-linked trade, financing costs, and settlement logistics create recurring demand.

As a unit of account, progress is slower. Pricing and invoicing change only when firms can quote in a new currency without adding risk and when hedging markets and contract routines support the shift. A European Central Bank analysis finds that renminbi invoicing has grown in some regions but still accounts for under 2 percent of global exports. In practical terms, the renminbi is used more often to settle than to quote. That matters because unit of account use helps lock in currency usage through benchmarks and contracts, not only through payment flows.

These uneven outcomes reflect the design of China’s approach. It has not pursued a single liberalization moment. It has built channels that make renminbi settlement easier while keeping the broader system managed. The building blocks are mundane, but they are what change day-to-day currency behavior.

One pillar is liquidity backstopping through central bank swap lines. A 2024 official release reports that the People’s Bank of China has signed swaps with more than 40 foreign central banks or monetary authorities, with 31 agreements in force totaling about 4.16 trillion renminbi ($586 billion). Swap lines do not create deep renminbi asset markets. They reduce a concrete operational risk for counterparties that need renminbi liquidity for trade and financial stability. 

A second pillar is payment settlement infrastructure. China’s Cross-Border Interbank Payment System supports cross-border renminbi settlement and is designed to reduce frictions in renminbi payment workflows. Shanghai’s municipal government reported that the new payment infrastructure processed 175 trillion renminbi in cross-border payments in 2024, up 43 percent year-on-year, with cumulative processing around 600 trillion renminbi ($81.83 trillion) by the end of 2024. China’s payment system is not a full substitute for the broader global messaging and correspondent banking ecosystem, which still provides unmatched reach. Its significance is more practical, simplifying renminbi settlement for banks and firms in settings where China-linked trade is dense and where counterparties value having additional payment routes alongside.

A third pillar is targeted adoption in sectors where China’s commercial role is already central. Bloomberg reported that Chinese mining operators in Zambia began paying royalties and taxes in yuan, with payments starting in Oct. 2025. Zambia is not rewriting its monetary regime. The narrower implication is that a government revenue stream in a core sector is now partly denominated in renminbi, creating routine demand for clearing and treasury operations in the currency. Over time, these operational footholds can matter more than headline announcements because they make renminbi handling normal inside fiscal and banking workflows.

A fourth pillar addresses the unit-of-account problem through venues where renminbi pricing and hedging are possible. The Shanghai International Energy Exchange states that its crude oil futures contract is priced and traded in renminbi, physically settled, and open to overseas investors, with listing in March 2018. Such contracts do not automatically displace global benchmarks. They provide infrastructure for quoting and hedging in renminbi, which is a prerequisite for expanding unit-of-account use in any segment.

Put together, these measures point to a corridor strategy rather than a straight line toward reserve status. China builds liquidity options, settlement rails, and usable market venues where trade and financing ties are dense, then allows adoption to spread through convenience and habit. This approach can keep raising the renminbi’s medium of exchange role even if the store of value role remains constrained.

The remaining barrier is not usage. It is confidence in exit. A reserve currency is one that major holders believe they can hedge, sell, and convert quickly in a crisis without fearing that rules will shift when pressure mounts. The Federal Reserve notes that capital controls and exchange-rate management can weigh on internationalization because they raise the risk that divesting renminbi assets becomes difficult or costly precisely under stress.

Seen this way, the most consequential policy response is not necessarily to prevent renminbi usage from expanding, but to avoid misdiagnosing what that expansion represents. Much of China’s progress reflects transactional substitution rather than systemic displacement. Firms and governments are adopting the renminbi where it lowers costs, reduces exposure to disruption, or offers redundancy in payments and financing. Trying to suppress that usage directly would be difficult and, in many cases, counterproductive.

For U.S. and allied policymakers, the more important strategic question is how to preserve the attributes that make their currencies attractive under stress. As Benjamin J. Cohen, a longtime authority on global currency power, puts it, an international currency must “offer the qualities of exchange convenience and capital certainty – a high degree of transactional liquidity and reasonable predictability of asset value.” Monetary centrality has never been sustained by market share alone. It rests on confidence that legal protections hold, liquidity remains available, and capital can move even when geopolitical tensions rise. Policies that introduce uncertainty around access to liquidity or blur the line between targeted sanctions and broader financial coercion risk accelerating the diversification they are meant to deter.

At the same time, corridor-based internationalization deserves more attention than reserve statistics suggest. China’s strategy does not require persuading reserve managers in major financial centers to reweight portfolios. It works through supply chains, commodities, and regions where China is already a central commercial actor. In these settings, small shifts in settlement, invoicing, or financing can change what options firms and governments have when markets are under stress. Over time, many such changes can add up, quietly reshaping how the global financial system responds in a crisis even if headline reserve shares move only slowly.

There is also a deeper tradeoff embedded in any bid for reserve currency status that China cannot avoid. The dollar’s rise to preeminence required the United States to supply dollars to the rest of the world, largely by running persistent current account deficits and purchasing vast amounts of foreign goods. Over time, that role reshaped the U.S. economy, contributed to domestic distributional tensions, and constrained trade policy choices. Monetary centrality came with real economic and political costs.

If China were to pursue reserve status in earnest rather than rhetorically, it would face a similar constraint. Supplying the world with renminbi would require greater tolerance for outbound capital flows, wider currency circulation, and ultimately a willingness to import more than it exports. That runs against the export surpluses and growth model that have underpinned China’s economic strategy for decades. In this sense, reserve currency ambition is not just a matter of financial reform or credibility. It is a choice about what kinds of macroeconomic imbalances a country is prepared to accept.

This helps explain why China’s approach has remained incremental and corridor-based. Expanding transactional use allows Beijing to gain some of the benefits of currency reach while postponing the macroeconomic and political burdens that come with supplying a global reserve currency. Xi’s announcement makes that tension explicit. It raises the question of whether China is ultimately willing to accept those burdens or whether it will continue to seek influence without full exposure.

Xi’s statement does not resolve these tensions. China can keep expanding renminbi settlement and trade finance while maintaining a managed capital account, and that trajectory is already visible in specific corridors. But reserve status requires predictable rules and a credible right for outsiders to move money in and out when conditions deteriorate. The takeaway is clear. The renminbi can become more common in global commerce without becoming a true reserve currency. Whether China reaches that threshold will be decided by how Beijing governs access when markets tighten, not by what it declares when they are calm.

Matthew Rochat is a scholar of international relations at the University of California, Santa Barbara. His research focuses on international political economy, monetary power, maritime security, and China’s engagement in Africa.

Image: Max12Max via Wikimedia Commons