The People’s Bank of China is pressing forward with a digital yuan, which leaves China’s digital currency plans significantly ahead of western nations’. While the U.S dollar has dominated global trade since WWII, the yuan, whether digital or analog, will have a leading role in challenging the hegemony of the dollar.

In early August, the renminbi’s exchange rate broke through the psychological threshold of CN¥7 per US dollar. While investors were still digesting the full significance of this event, US President Donald Trump’s administration startled the market by labeling China a “currency manipulator.”

The labeling of China as a currency manipulator by the United States is not only an incorrect assessment of the current economic situation, but also poses a significant threat to the future of the world economy.

A yearlong U.S.-China trade war boiled over on Monday as Washington accused Beijing of manipulating its currency after China let the yuan drop to its lowest point in more than a decade.

The issue of currency manipulation remains one of the thorniest issues to be hammered out during the final rounds of US-China trade talks. So far, negotiations have not reached consensus on a mechanism for dispute resolution that could satisfy both sides.

China must think twice before accepting the U.S. request to stabilize the renminmi.

In a rare harmony of interests, both China and the United States are pushing to stabilize the yuan. What remains to be seen is how this hypothetical agreement will bear on China’s long-term journey toward the yuan becoming one of the world’s principal reserve currencies.

China says it's able to keep its yuan stable.

China chooses not to follow the U.S. Federal Reserve to raise its short-term rates, putting pressure on the yuan.

The Chinese government won’t devalue the yuan against the dollar, for reasons which may surprise both policymakers and mainstream economists.