Macomb, Detroit, Michigan- The US Senate’s confirmation hearing for Mr Bessent last week as Treasury Secretary was remarkable, as much of the discussion revolved around China’s rapid economic growth and increasing dominance in global finance, economy, manufacturing, and infrastructure. It was unusual for a single foreign country to consume so much time in such a crucial hearing, reflecting both an acknowledgment of China’s deep penetration into almost every sector of geopolitical significance and the deep-rooted concerns of US senators over the pace and extent of America’s loss of influence to China.
A major point of discussion was the growing challenge posed by China’s yuan to the global dominance of the dollar. For the first time in modern history, the yuan is emerging as a serious competitor to what was once the unquestioned status of the dollar as the world’s primary reserve currency. Several senators expressed concerns over China’s strategic initiatives to internationalize the yuan, warning that its increasing use in global trade and financial systems could erode US economic power, weaken financial influence, and pose risks to national security.
The meeting highlighted China’s active expansion of yuan-based trade agreements, particularly through the Belt and Road Initiative (BRI) and bilateral currency swap agreements with nations seeking alternatives to the dollar, and China’s recent agreements with Saudi Arabia, Brazil, and Russia to conduct energy and trade transactions in yuan rather than dollars as a clear sign that allegedly Beijing is systematically working to erode the dollar’s dominance in international markets.
Additionally, concerns were raised about China’s push for a central bank digital currency (CBDC), known as the digital yuan, which could facilitate international transactions outside the SWIFT system. This development would reduce reliance on US financial institutions and weaken the effectiveness of US sanctions.
Lawmakers also expressed apprehension about China’s involvement in US financial markets and the risk that Chinese investments could influence American economic policy. Senator Cornyn questioned Bessent about the proposal to clear US Treasury futures through the London Clearing House, which is overseen by the Bank of England and includes Chinese financial interests. He warned that allowing foreign entities— especially those linked to China— to play a role in US debt markets could compromise national financial security.
Furthermore, Senator Sheldon Whitehouse raised concerns, albeit without substantiating that China’s banking system facilitates illicit transactions, including money laundering, cyber theft, and the financing of adversarial regimes and economic manipulation, and emphasized that the USA should strengthen financial sanctions against Chinese firms engaged in illicit activities.
The senators took a serious view of Chinese influence in US financial markets, its expanding role in global finance, and the use of Chinese state-owned enterprises (SOEs) in the USA as front companies to acquire US firms in strategic sectors, including technology, agriculture, and finance.
The meeting pledged to prioritize measures to ensure the dollar remains the dominant reserve currency by bringing fiscal stability, maintaining a low deficit, improving the economy, and nurturing financial leadership as the ultimate defenses against China’s attempts to undermine the dollar.
The senators on both sides of the aisle unanimously proposed a five-prong comprehensive strategy to strengthen the dollar as the global reserve currency and expand dollar transactions in global trade, particularly in the energy and technology sectors, to counter China’s push for yuan internationalization.
China’s dominance in global supply chains gives it unparalleled leverage in international trade. In some capacity, nearly every economy in the world relies on Chinese manufacturing infrastructure, secure supply chains, and exports. If China’s economic expansion continues at its current pace, the yuan will likely gain prominence as a global reserve currency at a much faster rate than both the dollar and the euro. This shift could significantly reshape the global financial landscape, challenging the long-standing dominance of Western currencies.
The first pillar of the strategy was strengthening US energy dominance to expand oil and gas production, reinforcing the dollar’s position in global energy markets. Since oil is traditionally priced in dollars, senators emphasized the need to implement policies that promote domestic energy independence, ensuring that major oil-producing nations continue settling oil transactions in dollars, thereby reducing the appeal of the yuan.
The second pillar focused on restricting China’s financial influence. Bessent supported tightening restrictions on US investment in Chinese financial markets and limiting US institutional participation in yuan-based financial instruments. This strategy aimed to ensure that global investors remain heavily tied to dollar-denominated assets, preventing China from gaining a stronger foothold in international finance.
The third pillar involved enhancing Treasury-backed digital payment infrastructure. Concerns over China’s digital yuan, and prompted discussions on developing a more robust digital payments system linked to the Federal Reserve. The goal was to maintain US digital financial instruments as superior and more widely accepted than China’s central bank digital currency (CBDC), preventing Beijing from leveraging technology to expand its financial influence.
The fourth pillar emphasized strengthening global trade alliances. Senator Todd Young suggested that the USA should deepen trade partnerships with Indo-Pacific nations and Latin American economies to ensure that international commerce remains dollar-centric. He also proposed expanding currency swap agreements with allied countries as a countermeasure to China’s aggressive financial diplomacy, which seeks to promote the yuan in global transactions.
The final pillar addressed tighter sanctions enforcement. Given China’s efforts to develop alternative financial systems, including the China-led Cross-Border Interbank Payment System (CIPS) as an alternative to SWIFT, senators stressed the need for stricter oversight of international financial transactions. This measure aimed to prevent US adversaries from circumventing sanctions by conducting transactions in yuan, thereby maintaining the dollar’s dominance in global finance.
His testimony reinforced the Trump Administration’s commitment to defending the supremacy of the dollar through energy policies, financial regulations, and trade alliances, aiming to prevent the yuan from becoming a viable alternative in global markets. However, whether the Trump Administration will succeed in slowing the internationalization of the yuan remains an ongoing challenge for US policymakers.
The real strength of the yuan lies in China’s rapid economic growth and development, the sheer scale of its economy, its expanding military capabilities, its advancements in space exploration, and its strategic alliances with both major global economies and developing nations. China has been aggressively investing in global infrastructure projects, research and development, innovation, and digitalization, all of which contribute to its increasing economic influence.
Additionally, China’s dominance in global supply chains gives it unparalleled leverage in international trade. In some capacity, nearly every economy in the world relies on Chinese manufacturing infrastructure, secure supply chains, and exports. If China’s economic expansion continues at its current pace, the yuan will likely gain prominence as a global reserve currency at a much faster rate than both the dollar and the euro. This shift could significantly reshape the global financial landscape, challenging the long-standing dominance of Western currencies.
