With U.S. financial hegemony, China can only look on and sigh in despair.

Everyone, I recently read an article in the Financial Times saying that the United States is winning steadily in financial competition with China, which excited me for a moment. But later I realized that the US is actually retreating in other areas, and only in this key area of finance does it win easily, because China's financial strength has completely stagnated. The financial strength gap between the two largest economies has reached the most disproportionate level in 500 years. For a great power to rise, besides military and trade, financial strength is also essential. In the past, central banks of other countries rushed to hold US dollars, which to some extent reflected the international status of the dollar. But look at the RMB today: its economy accounts for 17% of the world, but its foreign exchange reserves share is only 2%. Its trade volume accounts for 15% of the global total, but the RMB settlement share is only 2%. Over the past 50 years, financial assets have soared fourfold, exceeding 400% of global GDP, and the degree of financialization has reached a historic high, yet the RMB still hasn't gotten a share. Why hasn't China developed financial strength? The reason lies in the closed financial system, which makes it difficult for foreign investors to enter. The article's author made an analogy, saying that China's domestic market is a closed prison, where capital is guarded like prisoners and cannot escape. Some people try to break out of prison, using various illegal means to transfer funds abroad, damaging China's image as a financial center, so investors naturally still regard the US as the preferred market. If RMB internationalization is the goal, the author suggests implementing capital account liberalization. Didn't you want RMB internationalization? That means making the RMB fully freely convertible, letting the market decide, and ending the dollar's dominance. But this concept was very popular more than a decade ago, when domestic reformers, Wall Street, and the IMF all called for fully opening capital controls. But the result is that this term hasn't been heard for a long time. Because our country didn't fall into this trap; rashly opening up would instead lead to capital flight, or even being badly hurt by financial sanctions like Russia. So where is the problem? Teacher Tang Yinan from our institute happens to study the world financial system and RMB internationalization. I heard him talk about this topic. Simply put, there are three points. First, RMB internationalization should not aim to become a global reserve currency like the US dollar. The US, for financial hegemony, supplies dollars to the whole world; everyone makes things, and it is responsible for buying and buying. If you all hold dollars, isn't the currency internationalized? The cost paid is maintaining a huge structural trade deficit, and the side effect is abandoning the real economy and causing industrial hollowing-out. Dollar hegemony is secure, those in finance make money, but what about everyone else? Isn't America's predicament caused by comprehensive financialization? Now Western media are using financial hegemony to tempt us. This time they don't ask: what is the cost? The cost is the unavoidable Triffin dilemma in international finance—a country providing a global reserve currency must supply the currency through international trade, so it inevitably faces long-term deficits. If China imitates the US in pursuing RMB internationalization, that would be undermining its own foundation, and what would be hurt is precisely our core advantage: industrial capacity and supply chain dominance. My channel talks about so many industries every day, and this is exactly what it means. Second, even if the RMB wanted to imitate the US dollar, it couldn't. Because the international financial market has been alienated by the US dollar; its fundamental function is no longer to serve the real economy, but to serve dollar hegemony—absorbing over-issued dollars and providing paper financial returns. In such an order, if you want to replace it and take the dollar's path so that the dollar has no way out? Don't even think about it. Many countries have fallen into this system: Britain abandoned the real economy and became a secondary financial market of the dollar; Japan preserved its real economy but gave up monetary autonomy, reducing the yen to a carry-trade currency. If the RMB targets the dollar, the final result is very likely to become the yen, so why bother forcing itself in? For a developing industrial country, there is also the Mundell-Fleming trilemma: you cannot simultaneously maintain a fixed exchange rate, free capital flows, and an independent monetary policy. If free capital flows are allowed, the exchange rate and monetary policy must be dictated by the Federal Reserve and international capital. When capital floods in, the currency appreciates, export competitiveness declines, and real manufacturing is hit; when capital flows out, it's even worse—liquidity tightens, money becomes scarce, and domestic companies cannot repay debts and can only go bankrupt. Opening financial markets cannot solve this trilemma. Third, and most importantly, explore a new path. RMB internationalization must break free from rigid thinking. There is not only one path of imitating the US dollar, nor is it necessary to replace the dollar as a reserve currency. In the position of financial hegemony, using the RMB to replace the dollar would also lead us to a dead end. The correct approach is to take a new currency path backed by real assets. Unite with the vast number of developing countries, especially resource countries, to establish a new platform and issue a community currency with productive assets as reserves. Each country transforms its production capacity and natural resources into joint-stock operation of the new bank. The function of this new currency is not foreign exchange reserves, but to support construction and development, cutting off ties with Wall Street. In terms of role, it does not seek to become a new reserve currency to compete with the dollar for share, but to unite with the vast number of developing countries, transcend the logic of American-style globalization, and shift the function of international currency from foreign exchange reserves to joint-stock operation.