How Can the Renminbi Replace the Dollar Hegemony? A Rare Opportunity Has Emerged, Which Is Also a Historical Necessity!

The dollar hegemony was not built in a day, but its foundation is being quietly undermined. Over the past few decades, one of the core reasons why the dollar could maintain its position as the world's leading currency was the "oil-dollar" system: more than 80% of global oil trade is settled in dollars, and countries have to hold dollars to buy oil, thus forming a deep dependence on the dollar.

But now, Dao Ge feels that a new variable has emerged - that is, electricity.

If you look at the report released by the International Energy Agency (IEA) in 2024, you will know that global electricity consumption has increased by nearly 35% over the past decade, and the share of renewable energy generation has risen from 23% in 2015 to 38% in 2024.

More importantly, China has occupied an absolute dominant position in this field. As of the end of 2024, China's wind power and photovoltaic installed capacity reached 430 GW and 650 GW respectively, accounting for nearly 40% of the global total. More importantly, China is the only country in the world with the full industry chain capability of ultra-high voltage transmission technology.

What is ultra-high voltage? Dao Ge will explain it simply. It refers to the ability to efficiently and with low loss transmit electricity thousands of kilometers away to another country or even a continent. Currently, China has built 35 ultra-high voltage lines, with a total length exceeding 48,000 kilometers.

Dao Ge feels that a concept of a "Global Energy Internet" is beginning to take shape. China can connect Asia, Europe, and Africa through cross-border power grids. For example, the China-Pakistan Economic Corridor has planned to transport clean electricity from Xinjiang to Pakistan; China has already achieved grid interconnection with Laos, Vietnam, Myanmar, and other countries; even in Africa, the Ethiopian-Kenyan ±500 kV DC transmission project, constructed by Chinese enterprises, was put into operation in 2023.

In 2023, China and Brazil signed their first power equipment export agreement settled in local currencies, amounting to 2.8 billion US dollars; in 2024, Saudi Arabia signed a cooperation memorandum with China State Grid, exploring the use of the renminbi in new energy projects; that same year, seven out of ten ASEAN countries had signed bilateral local currency swap agreements with China, with a total amount exceeding 1.2 trillion yuan. More notably, the share of the renminbi in global payments has risen to 4.7% in 2024, setting a historical high, and this proportion is even higher in cross-border electricity trade and green finance sectors.

Just as oil supported the dollar hegemony in the 20th century, electricity may become the core carrier for the renminbi to go global in the 21st century.

Original article: toutiao.com/article/1850628497080602/

Statement: This article represents the personal views of the author.