Can China’s roaring trade engine power the yuan’s challenge to the US dollar? | South China Morning Post

In the run-up to this year’s ‘two sessions’ – the annual meetings of China’s top legislature and political advisory body – high-level policymakers have reiterated the need to defuse financial risks and root out political corruption, two of President Xi Jinping’s long-term priorities. In this series, we take stock of how those efforts have progressed, and what remains to be done.

The iron ore trade between Australian miners and Chinese buyers has long followed a familiar, bruising pattern. Tense negotiations and hard-fought battles last for months over one figure, the price per tonne. But now, another question has emerged: which currency to use.

In late 2025, reports surfaced that China Mineral Resources Group (CMRG) had instructed traders to stop buying US dollar-denominated iron ore from the Australian mining and metals giant BHP – news that drew global attention.

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For Australian miners, it might have looked like only the latest chapter in a long-running commercial dispute. But for China, thousands of miles away, it could form part of a much broader strategy: advancing the yuan’s rise on the global stage.

That push has political backing at the highest level. In a 2024 speech, President Xi Jinping outlined his vision for China to become a financial “powerhouse” or “superpower”, putting a “strong currency” – one with global reserve status – at the top of six core priorities.

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The remarks were recently published in Qiushi, the ruling Communist Party’s leading theoretical journal, ahead of the annual “two sessions”, one of the country’s most important political events.

“Although China is already a major financial country … it is not yet strong overall,” Xi had said. “Building a financial powerhouse requires long-term effort and sustained perseverance.”