WATCHING the recent live telecast of Scott Bessent’s confirmation hearing for Treasury Secretary of the United States was quite an experience. During the four-hour hearing, the members of the committee grilled Donald Trump’s nominee on multiple issues.
Interestingly, China emerged as the primary focus of the discussion, consuming most of the hearing. No other country or world leader was deemed worthy of significant attention, reflecting the US policymakers’ intense focus on China and its status as the foremost rival to American global influence. Committee members repeatedly referred to China as ‘Communist China’, labelling it the nation’s biggest adversary.
China’s growing influence in Latin America and Africa was highlighted as a significant concern, with senators obse-rving that Chinese investments in deve-loping regions provide Beijing with long-term leverage over critical resources and political alliances. To counter China’s expanding geopolitical reach, senators proposed strengthening US alliances in Asia, Africa and Latin America.
The committee members and Bessent were unanimous in viewing tariffs as the primary weapon in the economic battle against China. However, they differed widely on how this weapon should be deployed.
Rather than focussing solely on wea-kening China’s economic progress through tariffs, a more effective long-term stra-tegy for the US would be to strengthen its own industries through structural reforms. Enhancing the productivity and competitiveness of American manu-facturers would be a more sustainable solution than imposing reactionary tariffs.
Another major point during the hearing was the growing challenge posed by China’s yuan to the global dominance of the US dollar. For the first time in modern history, the yuan is emerging as a serious competitor to what was once the unque-stioned status of the dollar as the world’s primary reserve currency. The hearing highlighted China’s active expansion of yuan-based trade agreements, partic-
ularly through the Belt and Road Initiative (BRI) and bilateral currency swap agre-ements with nations seeking alternatives to the dollar, and China’s recent agre-ements with Saudi Arabia, Brazil and Russia to conduct energy and trade tran-sactions in yuan rather than the dollar.
Lawmakers also expressed apprehe-nsions about China’s involvement in US financial markets and the risk that Chinese investments could influence American economic policy.
The testimony proceedings reinforced the Trump administration’s commitment to defending the supremacy of the dollar through energy policies, financial regulations, and trade alliances. It was clear watching the testimony how keen the US lawmakers are about slowing down the internationalisation of the yuan.
The real strength of the yuan lies in China’s rapid economic growth and development, the sheer scale of its economy, its expanding military capab-ilities, its advancements in space explo-ration, and its strategic alliances with both major global economies and developing nations.
Additionally, China’s dominance in global supply chains gives it unparalleled leverage in international trade. In some capacity, nearly every economy in the world relies on Chinese manufacturing infrastructure, secure supply chains, and exports.
If China’s economic expansion continues at its current pace, the yuan will likely gain prominence as a global reserve currency at a much faster rate than the dollar or, for that matter, the euro. This shift could significantly challenge the long-standing dominance of Western economies.
Qamar Bashir
Islamabad
Published in Dawn, January 25th, 2025
