The U.S.-Iran conflict and Trump’s tendency to weaponize the dollar are hastening attempts by China to de-dollarize oil and gas markets, boosting the use of the ‘petro-yuan’, while pushing the EU to resurrect plans to strengthen the euro on the global stage. A tripolar monetary order is emerging, in which the dollar would be ‘first among equals’ and the renminbi, and the euro, would have their rightful place, commensurate with their importance in the global economy.

Given the profound changes in the international order and governance system, the diversification of international finance is an inevitable trend. Demand for an alternative global currency is becoming increasingly urgent.

The world has to prepare itself for a new monetary cycle following rising US interest rates.

Financial markets today are thriving. The Dow Jones industrial average, the S&P 500, and the Nasdaq composite index have all reached record highs lately, with emerging-economy financial markets also performing strongly. But digital currencies could further destabilize an already-tenuous leverage- and liquidity-based system.

The global economy now appears to be shaking off its deep post-crisis malaise, but the overhyped idea of a “new normal” for the world economy overlooks an extraordinary transformation in the global growth dynamic over the past nine years. It raises profound questions about the efficacy of monetary policy, development strategies, and the role of China.

As President Trump and President Xi prepare to meet in the near future, the current environment makes it unrealistic to expect any breakthroughs in bilateral relations. The sheer complexity of US-China relations, widely differing viewpoints, and the unsettled policy approach by the new U.S. administration make the willingness to meet and talk already an advance.

China faces the challenge of reforming its economic policies, and cooling its housing sector. While the Central Bank is taking appropriate actions, there are numerous challenges that may inhibit future growth.