China's Renminbi Faces Challenges as Global Reserve Currency

China is striving to position the renminbi as a global reserve currency, but capital controls are hindering its adoption. According to NS3.AI, these restrictions have led to a projected decline in the renminbi's reserve share from 2.83% in 2022 to 1.93% by 2025. Despite efforts to expand payment infrastructure through initiatives like the Cross-Border Interbank Payment System (CIPS) and the digital yuan, central banks continue to favor liquid and convertible assets. This preference is benefiting dollar stablecoins and Bitcoin as alternative settlement tools. The ongoing challenges with convertibility suggest that future reserve diversification may increasingly favor crypto assets that can bypass Chinese controls, unless reforms are implemented to enhance the renminbi's convertibility.