BRICS: The Shift from USD to Chinese Yuan in Loan Repayment Across 150 Countries?

• China's Ambition to Strengthen the Yuan Via the Belt and Road Initiative
• Implications of the Belt and Road Initiative
• China's Strategy to Internationalize the Yuan
• Changing Dynamics in Global Trade
• The BRI, BRICS, and the Potential Downfall of the USD

China's Ambition to Strengthen the Yuan Via the Belt and Road Initiative

The BRICS member, China, may utilize the Belt and Road Initiative (BRI) to bolster the Chinese Yuan and downgrade the USD. Launched in 2013, the BRI is a project by China that offers loans to developing nations for the construction of seaports, infrastructure projects, and railroads, among other things. China extends considerable loans for developmental projects globally, beneficiaries include Pakistan, Sri Lanka, and numerous African countries.

Implications of the Belt and Road Initiative

Presently, 155 countries have entered into the Belt and Road Initiative agreement with China and have received funds for developmental projects. There are speculations that China, a BRICS member, might be poised to use the BRI initiative as a platform to increase the usage of the Chinese Yuan in global trade, thereby superseding the USD.

China's Strategy to Internationalize the Yuan

China aims to internationalize the Chinese Yuan through the BRI. Currently, the 155 countries that have signed the BRI agreement fall under China's influence. It is believed that China is anticipating the full establishment of the Digital Yuan (CBDC) before making the Yuan the default payment for BRI projects.

Changing Dynamics in Global Trade

In essence, countries that have received loans from China through the BRI may soon repay these loans in Chinese Yuan. The USD might soon not be the preferred currency for settling loans with China. If this policy is implemented, 155 countries could potentially be repaying their loans in Chinese Yuan instead of the US dollar. The implications of such a shift could have significant impacts on various sectors in the US. The digital Yuan might alter the landscape of global trade, with the Belt and Road Initiative serving as the catalyst.

The BRI, BRICS, and the Potential Downfall of the USD

The BRI initiative is in line with the BRICS alliance's ambition to challenge the USD's dominance. Consequently, the Chinese strategic move to strengthen the Yuan could reshape the prospects of global trade.

Edited by Jonathan Stoker