Great Power Economic Competition, the PRC Economic Challenge, and the Prospects of De-Dollarization

Speaker: Dr. Brandon Kirk Williams (LLNL)

Date: 1 February 2024

Speaker Session Summary

China aims to de-dollarize the world economy, utilizing BRICS member states—namely Brazil, Russia, India, China, South Africa, Egypt, Ethiopia, Iran, and the United Arab Emirates—as a beachhead in the global economic system. According to Dr. Williams, there are two other important strategies employed by China to enhance the yuan’s prominence in the global financial sector involving the Belt and Road Initiative (BRI) and China’s dominance in the mass production of goods imported by other countries. With regards to this Chinese manufacturing dominance, Dr. Williams went as far to likening China to the world’s factory floor. He also stated that, despite the initial interest and participation in the BRI by countries dissatisfied with the current geopolitical and economic status quo, it has experienced diminishing interest, participation, and lost momentum due to China’s tendency to underdeliver on projects. The BRI’s loss of momentum is attributed to self-inflicted wounds by China and the deep proliferation of the US dollar worldwide and in the global banking system. 

The yuan does not currently enjoy the same long-term outlook and strength as the US dollar, Dr. Williams explained. This is because, while both Russia and China are economically resilient, their economic health is on the decline. Russia is experiencing economic hardship due to Western sanctions imposed in response to its invasion of Ukraine, and China’s domestic economy is experiencing slow growth after a period of economic boom. In an effort to improve its economic outlook and reduce dependence on the United States for exports, China has been increasing its exports to developing countries involved in the BRI. Dr. Williams suggests that one reason for China decreasing its export dependence on the United States is to mitigate the economic impact in the event of a conflict between the two countries. Overall, China’s attempt at de-dollarization is a long-term goal faces obstacles, such as a slowing domestic economy and reduced participation in the BRI. 

Speaker Session Recording

Briefing Materials:

Biography: Dr. Brandon Kirk Williams is a senior fellow at the Center for Global Security Research at Lawrence Livermore National Laboratory. He was a Wilson Center China Initiative nonresident fellow in 2022-2023 researching a project titled “The Innovation Race: US-China Science and Technology Competition and the Quantum Revolution.” He is also an affiliate at the Center for International Security and Cooperation (CISAC) at Stanford University.