Much ink has been spent discussing the tropes of China’s opportunities and challenges. On the former, China is a massive and fiercely competitive single market which, for all its ebbs and flows, is once again innovating and will eventually succeed. On the latter, geostrategic rivalry, low welfare and in turn consumption, insufficient intellectual property protection, and atypical controls on flows of capital and corporate data continue to plague international confidence.
I will touch on four key issues that are less commonly discussed, but nevertheless important: energy and food security and the US dollar; the role of capital markets in economic transformation; Global South engagement; and China’s intrinsic attractiveness.
Targeted, rather than broad-based, de-dollarisation
China’s energy and food security is deeply intertwined with its dependency on the US dollar, in which most global trade is denominated. China is the world’s largest importer of energy, spending US$420 billion in 2024 on crude oil, refined petroleum products and liquefied natural gas, mainly from Saudi Arabia, Iraq, the United Arab Emirates and Russia. China is also the world’s largest food importer, accounting for 60 per cent of global soybean imports for instance.
This sheer import volume makes China highly dependent on the US dollar, and in turn, vulnerable to US sanctions. Simultaneously, whatever export advantage China gains from weakening the renminbi, it pays for in pricier imports, which pressures its food and energy security.
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To mitigate these challenges, China has relied on three pathways – transitioning to clean energy, diversifying food and energy imports, and most broadly, de-dollarisation.
De-dollarisation most directly tackles the root of the aforementioned problems, yet is the hardest to accomplish, due to external and internal factors.
