ABSTRACT
This chapter attempts to spark a policy discussion on the effects of China’s renminbi internationalisation and foreign policy. Defining China’s market power as a form of structural power in geopolitics backed by China’s consumption power, it unravels the ramifications of renminbi internationalisation based on China’s market power beyond the geoeconomic perspective. It argues that, such ramifications are an outcome of the strategic bind that has been gradually developed by China and its trading partners via economic transactions, owing to the market power that China possesses. Such binds are often asymmetric in bilateral relations, and increase China’s bargaining leverage in foreign policy which is used for wielding power on the global stage. The chapter therefore emphasises that renminbi internationalisation should not be simply considered as China’s earnest efforts towards global currency diversification to assuage the side-effects of the dollar dominance, but rather be understood as a subset of China’s global stratagem, in which the renminbi is translated into a medium of power projection for Chinese foreign policy. The chapter presents two case studies of renminbi internationalisation – (1) electronic payment services via China UnionPay (CUP), and (2) oil transactions denominated in renminbi and the sale of China’s renminbi-denominated oil futures that signal the beginning of the end of the petrodollar dominance that has existed for decades since the 1970s.
