The Digital RMB and the Long March Against Dollar Power

Just as China stunned the world in January 2024 with groundbreaking progress in nuclear fusion—advancing its "artificial sun" and in 2025 as the AI powerhouse Deep Seek shook markets by plunging Nvidia’s stock markets, China has once again taken a long leap. This time, it’s entering the global stage with the digital RMB for cross-border settlement. This is happening at a time when Donald Trump is weaponizing the tariff to strengthen the hegemony of the dollars. The RMB stands for Renminbi, meaning “People’s Currency” in Mandarin—better known as Yuvan. And now, it’s going digital—with game-changing implications.

On March 17, 2025, the People’s Bank of China (PBoC) announced the full integration of the digital RMB cross-border settlement system with ten ASEAN countries and six MiddleEastern nations. This move marks a major shift—potentially tilting the epicenter of the global financial order and reshaping how international trade and transactions unfold in the years to come. Until now, the world has relied heavily on the SWIFT system—short for Society for Worldwide Interbank Financial Telecommunications—which has served as the backbone of international payments. This network processes global transactions, primarily in US dollars, reinforcing the dollar’s dominance in global trade. China, which has been leading the charge in the push for de-dollarisation, back in 2023, used their Central Bank Digital Currency (CBDC) system to settle the PetroChina-Dubai oil trade. But this was only the beginning of their jump towards the cross border settlement.

China began exploring digital currency development in 2014. By 2016, the PBoC had created a prototype of the digital yuan. In late 2017, the PBoC officially launched a research and development initiative for the digital currency, involving major commercial banks, internet firms, and telecommunications companies. By May 2019, they initiated one of the first large scale pilot programs for CBDC in several of its cities. Now according to various media reports, pilot testing of the digital RMB cross border system between Hong-Kong and Abu-Dhabi has been successfully completed. In contrast to SWIFT, which typically takes 3 to 5 days to process transactions and involves multipleintermediary banks, the digital RMB system achieved settlement in just 7 seconds. Built on blockchain technology, the system removed the need for six intermediary banks. Transactions were processed in real time through a distributed ledger and handling feeswere reduced by 98%. This technological edge has drawn participation from 23 central banks worldwide in the digital currency bridge trials. Among them, Middle Eastern energy traders have reported a 75% reduction in settlement costs.

According to the PBoc’s annual report, cross-border RMB settlement with ASEAN countries surpassed 5.8 trillion yuan in 2024—a 120% increase compared to 2021. Furthermore, China's strategic alliances through initiatives like the BRICS+ CBDC network and the mBridge platform create a distributed financial ecosystem that reduces reliance on any single point of failure. This multi-layered approach, technological innovation, geopolitical strategy, and centralized control, positions the digital yuan to withstand both current and future threats, ensuring its role as a resilient alternative to the dollar-denominated financial order.

The Digital RMB represents far more than just a digital payment innovation—it serves as a foundational technological pillar for China's Belt and Road Initiative (BRI), acting as both an enabler and accelerator of geopolitical and economic reorder that can reduce reliance on Western-dominated systems. China’s Belt and Road Initiative (BRI), spanning over seventy countries across Asia, Europe, and Africa, aims to channel trillions into infrastructure development. The digital RMB, with its potential for faster, cheaper cross-border payments, offers China a way to settle trade independently of the U.S. dominated financial systems. In the second quarter of 2018, China reported investments totaling more than $81 billion. In 2016, about 13.9% of trade between China and countries involved in the BR Initiative was settled in yuan, according to data from Standard Chartered.

China has been encouraging broader use of its currency in international trade under this initiative. Additionally, institutions like the Bank of China and China Construction Bank have issued bonds in both yuan and other currencies to support related projects. The digital RMB for transactions related to the BRI can help participating countries limit their exposure to currency exchange fluctuations. Major BRI projects—from Pakistan's Gwadar Port to the Laos-China Railway—are already using Digital RMB for contractor payments, supply chain financing, and operational expenses. This creates a closed-loop financial ecosystem where project funding,construction payments, and eventual revenue streams all flow through China-controlled digital channels.

The system integrates with China's Cross-Border Interbank Payment System (CIPS). The geopolitical implications are profound. As more BRI partners adopt Digital RMB for trade settlement and project financing, they naturally reduce their exposure to dollar-based systems while using China's financial infrastructure. This accelerates the RMB's internationalization while eroding the dollar's dominance, particularly in commodity markets where China is pushing for Digital RMB -denominated transactions in oil, minerals, and agricultural products. The recent mBridge project—a multi-CBDC platform involving China, UAE, Thailand, and Hong Kong—demonstrates how China is institutionalizing this alternative financial network.

Ultimately, the Digital RMB represents the financialization of BRI's physical infrastructure investments, transforming what began as a series of port and railway projects into a comprehensive economic system with China at its center. But the Digital RMB is also not immune. The vulnerabilities of blockchain systems, including those underlying the Digital RMB, present significant challenges that could potentially undermine the stability and security of China's digital currency. Cyber attacks pose one of the most pressing threats, with potential risks that could disrupt transaction validation to sophisticated smart contract exploits that might drain funds from digital wallets.

The decentralized nature of public blockchains makes them particularly susceptible to such attacks, but China claims that their centralized control over the Digital RMB system provides a critical layer of protection. The digital yuan's hybrid model, combining elements of blockchain technology with centralized oversight, has a defense against many of these vulnerabilities. Unlike fully decentralized cryptocurrencies, the Digital RMB system allows the PBoC to freeze or reverse transactions in cases of fraud or hacking, providing a safety net that decentralized systems lack. Beyond cyber threats, the infrastructure supporting blockchain technology faces risks from emerging technologies like quantum computing, which could eventually break current cryptographic standards. China is proactively addressing this by investing in

quantum-resistant encryption, aiming to future-proof the Digital RMB against such advanced threats.

Additionally, the potential for geopolitical interference, such as internet shutdowns or sanctions on key validators, has led China to develop systems, including offline transactioncapabilities and domestic satellite-based internet networks. These measures ensure that the digital yuan remains operational even in scenarios where external actors attempt to disrupt connectivity or access. However, the financial innovation of China, which is the second largest trading partner in the world who took over the US and became the largest trading partner with the EU and India, can definitely threaten the United States and faces profound contradictions in its attempts to maintain dollar hegemony. America's economic model since the 1970s has relied on a self-reinforcing but increasingly unstable triad: dollar supremacy driving financialization, which enabled offshoring industrial capacity, which in turn required deeper dollar dependence to sustain consumption. China's dual challenge as both the world's factory and now a financial architect threatens to collapse this entire structure.

The Chinese Renminbi (RMB) offers developing and socialist economies a crucial lifeline to reduce dependence on the US-dominated financial system, particularly amid escalating geopolitical tensions and economic warfare. By settling trade in RMB instead of dollars, these nations can bypass US sanctions, avoid dollar liquidity crises, and gain access to China's raw material markets and Belt and Road Initiative (BRI) financing. For socialist states like Venezuela and Cuba, as well as developing economies in Africa and Southeast Asia, RMB transactions provide a shield against US financial coercion—whether through exclusion from SWIFT or freezing of dollar reserves.

The Trump-era tariff wars (2018–2020) demonstrated how the US disproportionately harmed developing economies. When Trump imposed steel, aluminum tariffs and launched the US-China trade war, secondary impacts rippled globally—Brazil's soybean farmers lost Chinese markets temporarily, Vietnam faced US scrutiny for transhipping, and African exporters suffered from disrupted supply chains. Now many of these nations accelerated their interest in RMB-based trade with China as insurance against future US unilateralism. When Biden took over the administration maintained most Trump tariffs, in order to keep the developing economies under their thumb and vulnerable to US policy swings.