Bill Epperly, PhD

You've doubtless read the numerous headlines these past few days on how Xi Jinping called for the Yuan to "become a global reserve currency." That's true, he actually said that. But, as is often the case, Western media are missing the forest for the trees. This is extracted from a speech in which Xi laid out a much grander vision of what a “modern financial system with Chinese characteristics” (中国特色现代金融体系) would look like, essentially China's answer to Wall Street. Fascinatingly, and in stark contrast to the actual Wall Street, Xi's main argument is that what matter most aren't the institutions or status that China is seeking to build up - such as having the Yuan as a global reserve currency. Those are secondary. Xi argues that what truly will make or break the system is its moral culture. As he describes it, the Western financial system is nihilistic, counterproductive and ultimately politically destabilizing. Nihilistic in the sense that finance without moral purpose becomes self-referential - it stops serving anything beyond itself. He calls it "脱实向虚" ("drifting from the real economy into the virtual"): when finance detaches from the real economy, it loses its reason for existing. It’s not creating wealth, it’s just moving numbers around. Counterproductive in the sense that it actually destroys the thing it depends on. As Xi explains "if [finance] becomes obsessed with self-circulation and self-expansion, it becomes water without a source, a tree without roots" (无源之水、无本之木). In other words, finance detached from the real economy - like a tree that has severed its own roots - ultimately kills the economy. Lastly, politically destabilizing in the sense that financial elites captured by greed become ungovernable - they corrupt regulators, buy politicians, evade accountability. The Qiushi commentary on Xi's speech is extremely blunt about this (qstheory.cn/20260131/f48890d…): they say Xi seeks to "avoid the Western predicament of financial oligarchs hijacking public policy and deepening social division." “Financial oligarchs hijacking public policy” (“金融寡头绑架公共政策”) is remarkably blunt language. It's essentially saying that the West allowed oligarchs to capture the state (not wrong!). To avoid all of this, Xi lays out a vision for - in many ways - an anti-Wall Street: a 金融强国 ("financial powerhouse") that puts serving the real economy at its core. A system that - Xi argues - will ultimately make the Yuan a global reserve currency precisely because, ultimately, a global reserve currency is backed by trust. That's the forest: how you build trust is what matters. In my latest article I break down the full speech, how exactly Xi proposes to build this anti-Wall Street and what it reveals about a question we in the West have stopped asking: what is our financial system actually for? Full article here: open.substack.com/pub/arnaud…

They’re showing you what terrifies them.