The Death of the Dollar, Taiwan and Global Trade

The People’s Bank of China has launched its digital RMB cross-border settlement system, now seamlessly connected to the ten ASEAN nations:

Brunei Darussalam

Cambodia

Indonesia

Laos (Lao People's Democratic Republic)

Malaysia

Myanmar

Philippines

Singapore

Thailand

Vietnam

and six Middle Eastern countries:

Bahrain

Kuwait

Oman

Qatar

Saudi Arabia

United Arab Emirates (UAE)

Beyond these regions, the Cross-Border Interbank Payment System (CIPS), which supports the international use of the digital RMB, has expanded its reach significantly. As of December 2024, CIPS has 168 direct and 1,461 indirect participants across 119 countries and regions. This network encompasses over 4,800 banking institutions in 185 countries and regions worldwide.

Put in terms of world trade:

• China: ~13% of global trade

• ASEAN (combined): ~8–9%

• GCC (combined): ~4–5%

Total (Nominal Reach): ~25–27% of global trade

These regions are primarily engaged in global energy, manufacturing, and electronics trade.

If one includes the CIPS participants:

There are:

• 168 direct participants

• 1,461 indirect participants

• Banks in 185 countries and regions

A realistic estimate of this expanded network would Represent ~60–65% of global trade.

This development enables (at minimum) 37% of the world’s trade to bypass the U.S.-controlled SWIFT network. For cross-border settlements, SWIFT takes 3-5 days, and China’s blockchain-driven Digital Currency Bridge compresses the process to 7 seconds.

In a previous trial between Hong Kong and Abu Dhabi, a payment once routed through six intermediary banks now landed instantly—with a 98% drop in transaction fees. While the digital RMB is fast, it is also a technological moat as it enforces anti-money laundering rules through smart contracts, offers full traceability, and offers blazing-fast real-time payments—such as in the China-Indonesia “Two Countries, Two Parks” initiative, where cross-border settlement took just 8 seconds, slashing overhead and inefficiencies by over 100x.

Middle Eastern energy giants are embracing the shift, cutting settlement costs by 75%, while 23 central banks have joined the pilot, drawn by the system’s unmatched performance. This is a real threat to the dollar's domination as the world's reserve currency.

China’s Belt and Road Initiative is merging digital RMB with Beidou satellite navigation and quantum communication to build a next-gen “Digital Silk Road.” From oil trade in Thailand to European carmakers' freight settlements in the Arctic, China has weaponized blockchain to boost trade efficiency by 400%.

ASEAN cross-border RMB settlements hit ¥5.8 trillion in 2024, a 120% surge from 2021. Nations like Malaysia, Singapore, and Thailand have already moved to include the yuan in their foreign exchange reserves. The Bank for International Settlements has acknowledged the tidal shift:

“China is defining the rules of the game in the era of digital currency.”

While Washington still debates the digital dollar, Beijing has rolled out a digital payment web spanning 200 countries, handling over $1.2 trillion in cross-border settlements.

This is not only a threat to our ability to dominate world trade through our status as the world's reserve currency, which has led to decades of economic prosperity that is the envy of the world, but it also insulates China from sanctions should they choose to invade Taiwan.

China was paying attention to what happened to Russia when they invaded Ukraine, and one of the first responses by the United States was to restrict access to the SWIFT system.

So, while the President of the United States terrorizes our allies and China with tariffs, China is positioning itself to flood the world with inexpensive goods. China is currently the world's manufacturing superpower. As of 2023, China accounted for approximately 31% of global manufacturing output, surpassing the combined total of the next nine largest manufacturing nations.

Here is the list:

China: $4,658.78 billion

United States: $2,497.13 billion​

Germany: $844.93 billion​

Japan: $818.40 billion​

India: $455.77 billion

South Korea: $416.39 billion​

Mexico: $360.73 billion​

Italy: $354.72 billion​

France: $294.47 billion​

Brazil: $289.79 billion​

China is just getting started. Last year, as part of its National Integrated Circuit Industry Investment Fund (ICF), China invested US$47.5 billion to bolster the semiconductor industry, emphasizing areas like large-scale manufacturing, equipment, and materials. This is on top of the US$1.4 trillion allocated in response to the pandemic.

In the first seven months of 2024, investment in manufacturing surged by 10.9%, continuing double-digit yearly spending growth.

We won WWII on the backs of our factories, and Russia is still in the war with Ukraine on the backs of their ability to produce munitions.

The answer to this threat is not to destroy the economies of our allies but to work with them. It is not to get rid of our institutional knowledge needed to keep up with a rapidly changing world but to double down and find ways to compete in areas where China is quite frankly eating our lunch.

What I find most frustrating is that Trump sees the problem with international trade but lacks the intellect, temperament, or interest in working with our friends and allies to fix it.