China is offering Iran and Russia a way to circumvent US sanctions and continue doing business. But this comes at an elevated cost, because the country pays in onshore, non-convertible renminbi, which then has to convert to dollars using the weak financial network-tacitly strengthening the dominance of the greenback.
WASHINGTON, DC—After Russia’s full-scale invasion of Ukraine in 2022, the United States is seeking to freeze Russia out of the global financial system, prompting much speculation that the US dollar’s dominance of the system will accelerate the world’s shift away from the greenback. Speculation only increased when the US launched a war against Iran earlier this year and tightened financial sanctions on the country.