Challenging King Dollar

China is challenging the dollar’s domination in the global economy. [View in browser]( [Bloomberg]( President Xi Jinping is supercharging efforts to rival the most powerful currency in the world. China is pushing through deals linked to the yuan as it seeks to circumvent US attempts to weaponize the dollar. Agreements to transact some payments in the Chinese currency from Saudi Arabia, Brazil and even France have been signed in recent months. Sanctions on Russia — an acute reminder of the greenback’s unique dominance in the global economy — have been a potent catalyst in expanding the use of an alternative. Key Reading: - [China Takes Yuan Global to Repel Increasingly Weaponized Dollar]( - [Senate Democrats Plan Bipartisan Bill to Compete With China]( - [Brazil Takes Steps to Transact in Yuan as China Ties Grow]( - [Biden Seeks G-7 Backing for China Investment Curbs in AI, Chips]( For Beijing, the aim is to carve out a much bigger chunk of the international economy that doesn’t need the dollar at all. In the long run, that makes China less vulnerable to efforts to alienate it through investment restrictions or sanctions. It’s a welcome development for smaller nations — including at least a dozen in Asia — that are also experimenting with de-dollarization. Countries like Bangladesh and Laos have stepped up negotiations with China to boost their use of the yuan too. For now, King Dollar is far from being dethroned. Payments in the yuan still make up a tiny portion of global transactions and the currency is tightly controlled by Chinese authorities. That limited role has made it relatively low stakes for other countries opting to use the yuan. While there’s caution around becoming entangled in deteriorating China-US ties, so far there’s been little of that same sentiment when it comes to diving into this facet of their rivalry. But momentum to increase the yuan’s reach underscores Beijing’s broader push to create an alternate global order that challenges the US. And with Washington and the European Union increasingly viewing China as a strategic rival, it may no longer be so straightforward for other nations to separate the finance from the geopolitics. — [Rebecca Choong Wilkins]( Photographer: Steph Davidson/Bloomberg Listen to our Twitter Space discussion on the [renewed tensions in the South China Sea]( and the impact on Asia and the US. Understand power in Washington through the lens of business, government and the economy. [Sign up]( for the new Bloomberg Washington Edition newsletter delivered weekdays. And if you are enjoying this newsletter, sign up [here](. Global Headlines Ukrainian President Volodymyr Zelenskiy today [visited]( the International Criminal Court in The Hague, which issued an arrest warrant for Russian leader Vladimir Putin in March for alleged war crimes. Zelenskiy in Finland earlier [denied]( Russian claims that Ukraine was responsible for an assault on the Kremlin with two drones late Tuesday. Ukraine said its air defenses downed 18 of 24 Iranian-made Shahed drones launched by Russia overnight. Russia is desperate to find new markets for the natural gas it once sent to Europe by pipeline, and is on [a mission]( to dramatically increase exports by sea. The catch is it needs to develop its own technology to replace Western equipment, and fast, in order to meet an ambitious goal to triple liquefied natural gas deliveries by the end of the decade. - The EU is discussing a new [sanctions mechanism]( to target third countries it believes aren’t doing enough to prevent Russia from evading sanctions. Millions of jobs could vanish if the US breaches its debt ceiling and [tumbles into default](, the White House warned ahead of a planned meeting between President Joe Biden and congressional leaders. A short default would erase 0.6% of economic output, but a longer one would knock 45% off of the stock market and 6.1% from gross domestic product while raising unemployment by five percentage points, the Council of Economic Advisers said in a report. - Almost half of US adults say they’re [worried about the safety of their deposits]( in banks and other financial institutions — levels of concern as high or higher than during the 2008 financial crisis. Best of Bloomberg Opinion - [A Torrid Summer May Stall Asia’s Climate Goals: David Fickling]( - [The Ugly Case for Supporting Ukraine: Leonid Bershidsky]( - [Bats and Hippos Unlock Mysteries of Human Genome: Lisa Jarvis]( An artificial intelligence hiring [frenzy]( is ricocheting around the world, with tech giants like Google and China’s Baidu as well as companies in almost every other field, from health care and finance to entertainment, staffing up to avoid getting blindsided by developments in their industries. As [Saritha Rai]( reports, that’s leading to a bonanza for AI specialists in India, rare even in a country of 1.4 billion that has long been the back office for the tech industry. - Major AI companies including Microsoft and Google have [committed]( to participate in the first independent public evaluation of their systems before a meeting today with US Vice President Kamala Harris and top Biden administration officials. Employees at the Tata Consultancy Services campus in Chennai, India. Photographer: Dhiraj Singh Explainers You Can Use - [How Military Has a Thumb on Scales in Thai Election]( - [Why Uganda’s LGBTQ Community Is Under Renewed Fire]( - [Recession Is a ‘When’ Not ‘If’ for Milken Conference Panelists]( The Amazon rainforest is moving closer to a point at which parts of its ecosystem [won’t receive enough rain]( to support themselves, a development that could cost Brazil’s economy $184 billion by 2050, a World Bank report says. Climate change, illegal deforestation and the expansion of cattle pastures could jeopardize the country’s agriculture production, water supply and its ability to generate hydroelectric energy, the report said. - Brazil is in talks with the UK, France, Japan and the EU over funding to help it [protect]( the Amazon after Biden’s pledge of $500 million last month. The tight US labor market has prompted several Republican-lead states to roll back child labor laws aimed at protecting teenagers. The Big Take podcast explains where this is happening and who is pressing for these changes. Listen [here]( on [Apple]( and [Spotify](. News to Note - A judge dismissed former President Donald Trump’s [$100 million lawsuit]( against the New York Times and its reporters over an award-winning 2018 expose on his taxes. - Hungarian Prime Minister Viktor Orban urged Trump to return to the White House as president and renewed a call for [populist forces]( to wrest control of democracy in the US and Europe. - German Chancellor Olaf Scholz heads to Kenya and Ethiopia today as part of a European effort to [make inroads]( with countries of the Global South and push back against the influence of Russia and China. - Brazil’s former President Jair Bolsonaro [denied wrongdoing]( after federal police searched his Brasilia home in a case about alleged alteration of Covid-19 vaccination records. - The US and the Philippines vowed to [deepen their defense alliance]( through expanded military drills and joint patrols during President Ferdinand Marcos Jr’s visit to the Pentagon amid escalating China tensions. And finally ... When King Charles III leaves Buckingham Palace for his coronation at Westminster Abbey on Saturday, he’ll trace a route through central London that showcases some of the finest properties that are part of the [fortune]( belonging to the British crown. Through the Crown Estate and the Duchy of Lancaster, the sovereign controls a multibillion pound empire that also includes castles, riverbeds and quarries. Unlike other wealthy families, however, the king doesn’t personally own the assets and instead draws an income from them. Follow Us Like getting this newsletter? [Subscribe to Bloomberg.com]( for unlimited access to trusted, data-driven journalism and subscriber-only insights. Want to sponsor this newsletter? [Get in touch here](. You received this message because you are subscribed to Bloomberg's Bloomberg Politics newsletter. If a friend forwarded you this message, [sign up here]( to get it in your inbox. [Unsubscribe]( [Bloomberg.com]( [Contact Us]( Bloomberg L.P. 731 Lexington Avenue, New York, NY 10022 [Ads Powered By Liveintent]( [Ad Choices](