DES MOINES, Iowa, Oct. 6, 2026 /PRNewswire/ -- China has spent years building the infrastructure of a financial system that can operate without depending entirely on the U.S. dollar, according to Birch Gold Group. 

From cross-border yuan payments to digital-currency settlement, Beijing has developed alternatives to the dollar-based global financial system. Most recently, China and Hong Kong have begun expanding the vaulting, clearing and physical-delivery infrastructure around gold.

Individually, these developments are technical. Taken together, Peter Reagan, veteran Financial Strategist at Birch Gold Group, says they look like architecture.

"China can build payment networks, settlement systems and vaults," Reagan said. "What it needs but cannot manufacture on demand is monetary trust."

Despite years of internationalization efforts, the yuan accounts for only about 2% of global foreign-exchange reserves. China's capital controls and managed exchange rate conflict with its global ambitions: International acceptance requires confidence that reserves are freely accessible and exchangeable.

Reagan observes that gold may offer a solution.

"Gold doesn't depend on Beijing's promises or confidence in its monetary policy," Reagan explained. "It arrives with thousands of years of credibility already built in."

China is the world's largest gold miner, and its central bank reported adding to official gold reserves for 22 consecutive months through August. Meanwhile, Hong Kong launched a new gold clearing and settlement system in July, alongside a physical-delivery connection with the Shanghai Gold Exchange.

These developments coincide with gold's growing role in world central bank reserves. In 2025, gold surpassed U.S. government debt's share of official global reserves – a shift driven by gold's rising price, massive central-bank gold buying and the declining share of federal debt owned by central banks.

Reagan is not predicting a gold-backed yuan. Instead, he believes China's alternative financial system will rest on a foundation of massive gold reserves.

Why? Infrastructure alone cannot create trust. By making physical gold easier to hold, trade and deliver internationally, China could encourage greater use of its financial network without the same level of trust in its currency.

"Gold is history's shortcut to monetary credibility," Reagan said. "China appears to be building a financial system around that principle."

Reagan explores global reserve currency issues in his ongoing column for Birch Gold Group. Find more of his analysis at www.BirchGold.com.

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SOURCE Birch Gold Group