As China rises, so will the Chinese currency
It will take years but the world is looking to de-dollarize and that will give rise to the Chinese renminbi.
Investec Asset management argues that countries irked by US geopolitics and power, including the EU and China will want to cut their exposure to the dollar. Beijing would also prefer to borrow in its own currency.
"Every central bank I met last year asked how do I get out of dollars," said Hayden Briscoe, head of Asia-Pacific fixed income at UBS Asset Management. "More renminbi is now traded in London than sterling."
The rise of the Renminbi can only come if China liberalizes yuan flows. It was working in that direction and yuan-denominated trade was 2.8% of crossborder payments in 2015 but that was halved in the aftermath of run on the currency in August of that year. It's only bounced back to 2.1% as capital controls continue.