China yuan global currency: With the start of the Budget Session in India, China has sent a big signal on the global financial stage. The Chinese President has argued for making the yuan strong and widely acceptable at the international level. He said there is a need to give it a major role in global trade, investment, and foreign exchange markets. Analysts believe this initiative is being seen as a direct challenge to the long-standing dominance of the US dollar.
In an article published in the ideological journal ‘Qiushi’ of the Chinese Communist Party, Xi Jinping said China needs a currency that is not limited only to the domestic economy, but becomes a reliable base for international transactions. His emphasis is on a financial framework that suits China’s national conditions and follows a path different from the Western model.
Why this signal matters for India
India is currently an important member of the group and is also set to host its summit this year. In such a situation, China’s strategy of pushing the yuan forward can become a test of diplomatic and economic balance for India. India has so far avoided a direct confrontation with the dollar-based global system, but within BRICS, its role in discussions on a common currency and alternative payment systems is considered decisive.
Possible impact on trade and the energy sector
India is among the world’s major energy importers. In buying oil from Russia, it has already used alternative payment methods instead of the dollar. If yuan-based or BRICS-based payment systems gain momentum, India may get cheaper and more flexible trade options in some cases. However, there are also concerns that this could increase pressure on strategic and trade relations with the United States.
Dollar versus the BRICS initiative
China and Russia have long been pushing for a BRICS common currency and mechanisms like ‘BRICS Pay’. The question before India is whether it should play a leading role in this initiative or maintain a balance between the dollar-based system and multipolar alternatives. The US President has already warned that countries challenging the dominance of the dollar could face heavy tariffs, which may also affect India’s economic strategy.
Yuan and regional currency competition
According to experts, if the yuan becomes stronger at the international level, currency competition in Asia will intensify. This can be both an opportunity and a risk for India. On one side, India is maintaining a strategic partnership with the United States, and on the other, it claims an influential role in the Global South and BRICS.
China’s effort to reduce dependence on the dollar
Over the past few years, China has been taking continuous steps to reduce its dependence on the dollar. In 2025, a large share of its total foreign trade was settled in yuan. In oil and gas trade with Russia as well, the yuan is being used extensively. Apart from this, China is promoting trade in local currencies by entering into currency swap agreements with several countries.
Is the yuan still undervalued?
International investment banks, including some, believe that the yuan is still trading below its real value. According to experts, the Chinese central bank wants to strengthen the currency, but is cautious about avoiding sharp fluctuations.
Focus on India’s role
Xi Jinping’s statement makes it clear that China wants to create a distinct identity in the global financial system. For India, this is a time to clearly define its economic and diplomatic priorities—where on one side there are strategic partnerships, and on the other, the challenge of playing a balanced and independent role in a multipolar world.
Utkarsh works as a Sub-Editor at 1Tak News. Technology and gadgets are his main beats, and he also tracks automobiles. A graduate of Mahatma Gandhi Kashi Vidyapeeth, he began his journalism career in 2023 and has built experience across digital media platforms like 1Tak. Besides technology, he also has considerable experience covering national affairs, politics, research, and international news.
