China Deploys Dual-Track Financial Statecraft Ahead of Xi Jinping's US Visit

China has been manipulating its currency and Belt and Road debt to create maximum leverage for President Xi Jinping's state visit in Washington. The People's Bank of China has set a stronger yuan reference rate for eight consecutive sessions, the longest streak since 2023, pushing the currency to its best levels against the dollar since 2022.

The central bank has been narrowing the gap between its daily fix and market expectations, giving tacit permission for the currency to climb without an official policy announcement. Additionally, the Shanghai Clearing House added new currencies to its yuan central-clearing system, waiving fees on these pairs until 2028, extending Beijing's settlement plumbing into Belt and Road trade corridors.

However, this appreciation of the yuan is not accompanied by loosening capital controls, which remain unchanged for a decade. The second track of financial statecraft involves China's Belt and Road Initiative, where loans written during the 2013-2020 building boom are now being collected, rather than refinanced.

Testifying before the House Financial Services Committee, Treasury Secretary Scott Bessent stated that China's Belt and Road has 'gone from a lending operation to a collection operation.' This shift in focus gives Beijing leverage over dozens of finance ministries, independent of any agreement reached with Washington. If the summit produces only a truce extension, Beijing will still hold structural leverage over the Global South.