China’s yuan is emerging as a strong challenger to the dollar’s dominance. Here are 5 countries that recently turned to the yuan instead of the USD for trade.

China’s yuan is gaining increasing usage globally, pointing to the de-dollarization of transactions worldwide — gradually

The US dollar has been the world’s reserve currency since the second world war, playing an outsized role in the world’s trade. 

But countries globally are now lining up backup currencies for trade, as sanctions against Russia over its invasion of Ukraine have led to some prominent world leaders and business figures sounding a warning over the power Washington wields.

The sanctions that squeezed Russia’s dollar currency reserves “increased the perceived risk that those debt assets can be frozen in the way that they’ve been frozen for Russia,” billionaire investor Ray Dalio cautioned on an April 12 Julia La Roche Show.

Even President Emmanuel Macron of France – a key US ally — warned against the “extraterritoriality of the US dollar,” suggesting in an April interview with Politico that Europe should cut its dependence on the greenback.

Europe “won’t have the time nor the resources to finance our strategic autonomy and we will become vassals” should tensions between US and China heat up, Macron told Politico.

Amid these dire tidings, the Chinese yuan is seizing the opportunity and is mounting a challenge to the dollar’s dominance. 

The use of the yuan overtook the use of the dollar in China’s cross-border transactions for the first time in March, according to an April 26 research report by Bloomberg Intelligence. 

Treasury Secretary Janet Yellen acknowledged as much, telling CNN in April: “There is a risk when we use financial sanctions that are linked to the role of the dollar that over time it could undermine the hegemony of the dollar.”

“It is a very effective tool. Of course, it does create a desire on the part of China, of Russia, of Iran to find an alternative,” Yelled said.

While the intent may be there, Yellen, however, noted that it wasn’t easy to replicate the eco-system — such as the international payments infrastructure — that supports the US dollar.

Read further for five countries that have recently turned to the yuan for trade and other transactions — either to skirt sanctions or as an alternative to the greenback.