Chinese President Xi Jinping has pitched for building a "strong currency" to expand the global use of the yuan and elevate it to the status of an international reserve, a move seen as a call to challenge the US dollar.

China, the world's second-largest economy after the US, has been accelerating the use of the yuan in international trade to reduce reliance on the US dollar. Last year, it settled nearly one-third of its USD 6.2 trillion foreign trade in local currency.

In an article published in Qiushi, the ruling Communist Party’s leading theoretical journal, on Saturday, Xi said China needs to build a “strong currency” that can be widely used in international trade, investment and foreign exchange markets, and achieve the status of a global reserve.

Though Xi did not directly mention the US dollar in the article, the excerpts of which were carried by several media outlets here, the Chinese president has been strongly pushing for the yuan (RMB) to become an international currency to rival the dollar since assuming power in 2012.

While China ranks among the world's biggest economies in terms of banking assets, foreign exchange reserves and capital market size, it remains “big but not strong” overall, Xi said, stressing that building a financial powerhouse would be a long-term task, the Hong Kong-based South China Morning Post reported.

China, along with Russia, has been promoting the Cross-Border Interbank Payment System (CIPS) as an alternative Swift international bank network.

China, the largest buyer of Russian oil and gas, has also expanded the use of the yuan in bilateral trade with Russia.

According to reports, China has already established currency swap agreements with about 50 countries to facilitate trade in local currencies.

Over the past year, the yuan has generally strengthened against the dollar, although international investment banks maintain that it remains below its long-term fair value.

Goldman Sachs analysts said in a January 5 report that the yuan could be trading about 25 per cent below its fair value against the dollar.

Observers say the Chinese central bank prefers a relatively firm currency, while remaining cautious about allowing rapid appreciation.

Beijing and Moscow have also been pushing within BRICS, now a 10-member bloc comprising Brazil, Russia, India, China and South Africa, along with five new members, for a common BRICS currency and an alternative BRICS Pay payment system to rival SWIFT.

The issue is expected to figure in this year’s BRICS summit to be hosted by India. US President Donald Trump has warned of imposing heavy tariffs if BRICS countries move ahead with plans to challenge the dominance of the dollar.

Xi said China's financial development with Chinese characteristics not only follows the path of the development of modern finance, but also has distinctive features that suit China's national conditions, which is different from the Western financial development model, the state-run Xinhua news agency reported, citing the article in Qiushi.

Xi underlined that the fundamental attributes of a financially robust country should be based on a strong economic foundation, possessing world-leading economic, scientific, technological and overall national strength.

The country should also have a series of key core financial elements, such as a strong currency and central bank, robust financial institutions and international financial centres, solid financial supervision, and a high-calibre team of financial talent, he said, calling for efforts to enable China to reach higher standards.

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