China Wants Dollar Throne But Keeps Clinging to Capital Controls

KEY POINTS

•In early 2026, Xi Jinping emphasized the importance of a powerful global currency in Qiushi magazine, aiming for China to boost its financial might.
•Economist Eswar Prasad explained that China eased renminbi trading between emerging markets but capital controls and trust issues restrict its global appeal.
•Despite ambition to lessen U.S. dollar dependence, China’s strict capital regulations and fragile institutions limit the renminbi’s rise as a reserve currency.

Chinese President Xi Jinping told Qiushi magazine on February 2, 2026, that having a global reserve currency is key to being a financial superpower. Too bad China’s still policing capital flows like it’s a secret VIP club while dreaming of dethroning the wildly messy but free-spending U.S. dollar. Economist Eswar Prasad from Cornell pointed out China made cross-border currency swaps easier, letting India and others ditch dollar middlemen, though investors still side-eye China’s bonds and its "weak institutional framework." While China’s push to boost the renminbi in emerging markets is real, it’s like trying to win a marathon while hopping on one foot—ambitious but limited.