Sen. Marco Rubio (R-Fla.), the vice chairman of the Senate Intelligence Committee, is warning that China is trying to replace the dollar with the yuan as the world’s most traded currency and has evaded U.S. sanctions on Russia by setting up transfer trade system independent of Western banks.
Rubio, in an op-ed for British news site The Telegraph, warned that the United States’s ability to punish other countries through financial and banking sanctions is being challenged by China’s yuan, which is now the most traded currency in Russia.
“This alternative financial system is currently limited by its scope,” Rubio wrote. “Nevertheless, it is providing a lifeline to Vladimir Putin as he resists punitive measures in the wake of his invasion of Ukraine.”
Rubio warned the emergence of an alternative financial system “creates a blind spot” in which other nations and companies that do business with the United States “can hide questionable behavior from the global community.”
“Moreover, as China’s economy continues to grow, more nations will enter Beijing’s orbit and this emerging system” of alternative finance, Rubio wrote.
“Two policy conclusions should follow from these developments. The first is that we need to revitalize domestic manufacturing,” the Florida senator said, arguing that “to survive and thrive in a multipolar era, we need to be able to make things again — from semiconductors to pharmaceuticals and everything in between.”
Rubio said the second takeaway is that the United States needs to get better and making and keeping allies and can “no longer count on foreign countries to follow our lead by default.”
“To balance Beijing’s growing anti-American coalition and to keep the dollar as strong as possible, the U.S. must build a coalition of its own,” he wrote.
Rubio said in a follow-up interview with The Hill that in reaction to the strict sanctions placed on Russia after its invasion of Ukraine, China appears to have accelerated its efforts to create a global financial system in parallel with the West.
“The Chinese are thinking that’s there’s going to be a Western-led sanctions as a result of something that happens in Taiwan. I think they begin to view as, ‘Well, this is the best way to protect ourselves, to make sure we can conduct business,’” he said.
Rubio said an alternative financial system also give countries that want to buy Russian oil at a discount a way to circumvent U.S. sanctions.
“I think the Chinese see an opportunity now and you’re beginning to see them make moves,” he said.
Rubio said he still believes sanctions are “effective” but he warned that the current and future administrations need to be “mindful” that the more sanctions that are applied internationally, the more incentive there will be for countries to participate in an alternative financial system based on the yuan.
“If you sanction enough countries, you create almost a common market of economies that have an interest in an alternative way to conduct business with one another,” he said, noting that China has long tried to create an alternative to the SWIFT, the messaging network that underpins the global system for financial transfers.
“I think it will be probably be accelerated now,” he said. “Recent events, what’s happened with Ukraine and now with the specter of Taiwan, it probably has accelerated their timeline.”
He said the Chinese eventually want to create “a new global order.”
“They said this, it’s open — especially if you read the English translation of the Mandarin speeches — it’s pretty clear they’re offering not just an alternative, but one they believe will become the dominant world order in which they’re creating parallel institutions to everything that was created after World War II: the World Bank, the IMF, existing trade agreements and so forth. And I think that eventually, the currency is going to be part of it,” he said.
“They operate on 50-year plans, not two-week plans like we do,” he added. “It was always to replace or supplant the U.S. as the world’s dominant economy on every front.”