The renminbi stands at 1.99 per cent of world reserves, and abroad this is reported as a failure of ambition. It is a decision. The first requirement of the job is an open capital account, and after 1997 and again after 2008 the settled view here is that control of the capital account is what carried the country through both. That is a price, not a milestone we have yet to reach.
The second requirement is worse, and it is the one nobody in Washington says out loud. Zhang Chun of the Shanghai Advanced Institute of Finance puts it as an economist rather than as a patriot: currency hegemony runs straight into America's own difficulty, because the currency becomes greatly overvalued, everyone buys it, and your exporters may lose their competitiveness altogether. Why did American industry hollow out, he asks. Because the dollar was too strong.
Why would we ask to be given the affliction we have spent twenty years describing?
Some correction is owed to our own side as well. Settlement capacity is not reserve status. Daily clearing through our cross-border payment system rose to 920.5 billion renminbi in March, when the strait was shut, and fell back to 673.9 billion by May: that is a detour around a blockage, not a migration. Foreign investors hold about one trillion dollars of onshore Chinese bonds and equities against 19.84 trillion of American equities alone. Anyone talking about succession should be asked which pool they propose the world's reserves sit in.
So the gold is not a bid for the throne. It hedges the dollar's administration, not its decline, and Poland bought more of it this year than we did. The renminbi will rise regardless: Zhang expects it inside the world's top three for payments and reserve standing within five to ten years, the leading currency of the second tier, perhaps a fifth of world currency share, with the cost of the reserve role shared with the dollar rather than taken from it. Sharing a burden is not applying for a throne.
The renminbi stands at 1.99 per cent of allocated world reserves, and the figure is reported abroad as the verdict on fifteen years of effort. It is not a verdict. It is a position, chosen, and the reasoning has been published here for two decades by people who are not required to be optimistic in print.
Start with what the job actually demands, because the Western discussion treats it as a prize rather than a contract. The issuer of the world's reserve asset must let foreign holders take their money out at any moment, which means an open capital account. It must accept that its currency is bought for reasons unconnected to its exports. And it must run deficits permanently, so that the world can obtain the paper it is required to hold.
Why would we ask to be given the affliction we have spent twenty years describing?
On the first of those the decision was taken twice, and taken by people who had watched what happened without it. In 1997 the region around us was dismantled by capital that could leave overnight, and the currencies that stayed standing were the ones whose governments could stop it. In 2008 the same instrument absorbed a shock that originated entirely in New York. Control of the capital account is not an unfinished reform. It is the reform.
On the second, the clearest statement comes from Zhang Chun, professor of finance at the Shanghai Advanced Institute of Finance, and he makes it as an economist. Were the dollar to decline quickly, he argues, China still should not become number one and should not seek hegemony in currency, because currency hegemony runs immediately into America's own problem: the currency becomes greatly overvalued, everyone buys it, and Chinese exporters may lose their competitiveness altogether. He asks why American industry hollowed out and gives the same answer we would give. Because the dollar was too strong.
That is the whole of the argument, and it is worth noticing what kind of argument it is. It is not a complaint about American power. It is the observation that the exorbitant privilege and the industrial decline are the same fact seen from two ends, and that a country with 200 million people employed in making things has no reason to volunteer for the second in order to obtain the first.
What is being built instead has a name in the scholarship: partial internationalisation, and it is a destination rather than a stage. Trade partners are signed up to settlement platforms and invoicing in renminbi while the capital account stays regulated. That combination is usually described abroad as a contradiction to be resolved. It is the design.
Yu Yongding and Pan Yingli have made the cautious version of the same case for years, and they are worth reading precisely because they are not enthusiasts. Internationalisation is a long-term objective and not an urgent task; capital-account liberalisation is its prerequisite and cannot be rushed; and a surplus country that pays for imports in its own currency ends up holding the dollars it earns and recycling them into Treasury securities anyway. Rushing the currency does not escape that circuit. It formalises it.
Now the corrections owed to our own commentators, who have been careless. Settlement capacity is not reserve status. Daily settlement through the cross-border interbank payment system reached 920.5 billion renminbi in March 2026, while the strait was closed, and had fallen back to 673.9 billion by May. Traffic that arrives with a blockage and departs with it is a workaround. The system now has 193 direct participants and more than 1,500 indirect ones, which is real infrastructure and is not a reserve system.
The scale is the second correction. Renminbi clearing averaged around 350 billion dollars a day last year against 2.014 trillion through the American system. Ninety-six per cent of institutional over-the-counter renminbi trades still have a dollar on the other side, up from 94 per cent in 2022. Our own internationalisation currently runs on the dollar, and saying so in public is more useful than the alternative.
The third is the asset base, and it is the one that ends the succession talk. Foreign investors hold about one trillion dollars of onshore Chinese bonds and equities. They hold 19.84 trillion of American equities and 13.84 trillion of American debt securities. There is no pool here for the world's reserves to sit in, and creating one at that scale means opening the capital account, which returns the argument to where it started.
What the freezes taught should be stated without satisfaction. Between 275 and 320 billion euros of Russian reserves were immobilised in 2022. More than 100 billion dollars of Iran's has been blocked for forty-seven years, some of it held here. Venezuelan oil proceeds are administered from Washington. The lesson is not that the dollar is finished; it plainly is not. The lesson is narrower and harder: a large holding in another state's ledger is a position, not a possession.
Hence the metal. Central banks bought a record 289 tonnes of gold in the second quarter, and we took 25 tonnes this year against Poland's 64. Poland is a member of NATO and of the European Union, in no danger of sanction from anyone, and it is buying faster than we are. That is the fact to put in front of anyone who thinks this is a Chinese campaign. Gold hedges the administration of the dollar, not its decline, and the hedging is being done by America's friends.
What Washington should take from all of this is not a threat. It is a diagnosis it does not want. The strong dollar that its reserve role sustains is the reason its tradeable sector cannot hold markets, and no accord, tariff or devaluation reaches the cause while the demand for reserve assets is what it is. We are saying this in our own interest, which is the reason to believe it: a disorderly dollar would cost us more than anyone.
So the position, stated exactly. The renminbi will rise, and considerably. Zhang expects it inside the world's top three for payment share and reserve standing within five years and at the latest ten, the leading currency of the second tier, possibly reaching a fifth of world currency share, with the cost of the reserve role shared between the renminbi and the dollar rather than seized from it. Sharing a burden is not applying for a throne. We are not applying for the job. We decline to be hostage to it.
