• China is pushing yuan use globally to guard against potential Western sanctions.
• Beijing aims to reduce risks from sanctions in geopolitical tensions, like over Taiwan.
• But China's trade partners face challenges in using more yuan.

China is on a drive to expand the use of the yuan internationally. But Beijing's near-term intent is more about sanctions protection than currency dominance, according to a researcher.

"China's strategies to develop an alternative financial system are defensive rather than offensive — at least for now," wrote Zoe Liu, a fellow for China Studies at the Council on Foreign Relations, on Wednesday.

Beijing's goal now is to minimize any impact from potential sweeping sanctions from the West in "extreme geopolitical scenarios," such as a military conflict over Taiwan, which China claims as its territory, wrote Liu. Her post was published on the website of the Official Monetary and Financial Institutions Forum, a London-based think tank.

"Expanding the use of the renminbi in trade is less challenging than increasing its status as an international reserve currency," Liu wrote.

Countries around the world have been diversifying their assets and chipping away at the dominance of the US dollar over fears that — like Russia — they could be shut out of the greenback-based world financial system should sanctions hit.

However, king dollar is so entrenched in the world's financial system that few really think it can be dethroned.

The yuan faces challenges in its globalization

While the US and China's strategic competition points to a possible race for currency supremacy, the Chinese yuan is far from ready — and even Beijing knows that.

An often-cited hurdle to the yuan's internationalization is China's use of capital controls to maintain financial stability. This means Beijing has control over how much foreign money can move in and out of China's economy, which in turn influences the foreign currency exchange rate.

However, capital controls are not necessarily a dealbreaker for the broader adoption of the yuan in trade, wrote Liu.

This is because China is already a top trading partner for over 120 countries. Furthermore, Chinese authorities are willing to facilitate exports by offering currency swaps and providing trade finance, Liu added.

However, the yuan's path to becoming an international reserve currency is fraught with obstacles because of other factors. They include the lack of risk-free yuan-denominated assets, the relatively closed nature of the Chinese financial market, and Chinese leader Xi Jinping's preference for one-man rule over the rule of law, Liu wrote.

Businesses have reservations about using the yuan

Recent data from China's central bank showed even Chinese businesses aren't that sold on the yuan, as they hold back on converting their foreign-exchange earnings into the Chinese currency.

This appears to be primarily due to the yuan's current weakness. It also shows it's not so easy to displace the mighty US dollar as the world's top reserve and trading currency of choice.

A recent global survey of 1,660 enterprises showed that there is just not enough interest in using the yuan to trade.

Conducted in March by China's Bank of Communications and Renmin University, about three-quarters of the survey's respondents were located in East Asia. Another one-fifth of respondents were from Southeast and Central Asia.

Half of the companies surveyed said the main stumbling block to wider use of the yuan was simply because their trading partners were not willing to use the currency.

About 64% of all respondents cited the "complexity of policies" as the main obstacle, while more than 40% of them cited other difficulties including barriers to capital flow.

• Two senior US officials told the NYT that Washington has sent plans for more than 1,000 weapons to Ukraine.
• The reported transfer comes amid a push from the West to help Ukraine boost its domestic weapons production.
• The officials declined to say which weapons plans were included, but left a clue, per the NYT.

The US has given Ukraine manufacturing plans for more than 1,000 American weapons in hopes of helping Kyiv bolster its own arms production, two officials told The New York Times.

The military officials told NYT's John Ismay of the transfer during a reporting visit to a new factory for Howitzer artillery shells near Dallas.

According to the NYT, these two officials were William A. LaPlante, Undersecretary of Defense for Acquisition and Sustainment, and Douglas R. Bush, Assistant Secretary of the Army for Acquisition, Logistics, and Technology.

They told the outlet that the US has also translated technical manuals from English to Ukrainian but declined to say which weapons were involved, per NYT.

"What are they using the most?" Bush told Ismay.

Drones and artillery shells have been among the most prominently used weapons in the war, but neither official was reported to have given further information on the plans.

Their remarks came amid the opening of the $500 million Dallas plant, which is run by General Dynamics and aims to boost artillery shell production by another 30,000 155mm rounds a month.

The US has set a goal of producing 100,000 such shells a month by end-2025, after sending more than 3 million rounds together with its allies to Ukraine. Demand there for the ammo is pressing.

The US Army has said it would need about $3.1 billion to buy the rounds and expand production to achieve its ammunition goal. It's unlikely that all of these new rounds will be earmarked solely for Ukraine.

Before the Dallas plant was set up, the US was reported at the end of 2023 to be making about 28,000 Howitzer shells a month. NYT reported that production this month rose to about 36,000 shells without the new factory.

Meanwhile, Russia is estimated to be producing about 250,000 shells a month, according to NATO assessments reported by CNN in March.

Western countries are concerned by the rate at which Moscow has been able to rapidly expand and galvanize its defense manufacturing industry, with some think-tank estimates saying the Kremlin can sustain its high casualties in manpower and equipment for years.

Ukraine already needs more troops, and the US and Europe have been trying to shore up its military supplies.

The European Union promised in March to deliver 1 million more artillery shells to Kyiv over the next year. But with reports that it's only manufacturing about 30% of what's needed, some experts say Ukraine could eat up Europe's current entire annual production within two months.

Press teams for the US Army and the Pentagon did not immediately respond to requests for comment sent outside regular business hours by Business Insider.

• Beth Hammack, a former Goldman Sachs executive, was just appointed Cleveland Fed president.
• Hammack succeeds Loretta Mester, known for her hawkish stance on inflation policies.
• She starts on August 21 and will vote in the September Fed meeting.

Longtime Goldman Sachs executive Beth Hammack, who left in February, is heading to the Federal Reserve Bank of Cleveland as its next president.

She will take office on August 21 and vote on monetary policy decisions starting in September, the bank said Wednesday. She'll lead 1,100 employees in her new position.

Hammack replaces Loretta Mester, who is stepping down on June 30 after a decade as the Cleveland Fed's president. Mester is one of the US central bank's most hawkish chiefs, backing policies to combat inflation despite other risks to the economy.

Hammack will be the bank's 12th president and the fourth woman to lead the organization. She will be responsible for all bank activities, including monetary policy, financial institution supervision, and payment services.

Before co-heading global financing at Goldman, Hammack was the firm's global treasurer, global head of short-term macro trading, and global head of repo trading. She joined the company in 1993 as an analyst in capital markets.

The Cleveland Fed announced a nationwide search for a new president in November. Until Hammack's start date, first vice president Mark Meder will serve as interim president.

Hammack joins the Federal Reserve System at a time when it is heavily debating when to begin interest rate cuts. The central bank raised borrowing costs from close to zero to around 5.5% between March 2022 and July 2023 and has kept them at that level since. Earlier this month, Chair Jerome Powell warned that rates will have to stay higher for longer to help ease price pressures.

The Cleveland Fed is part of the Federal Reserve System, which regulates monetary policy and banking institutions. It comprises 12 regional banks, which oversee regional economic interests and coordinate with the New York Fed.

• NATO members have less than 5% of the air defenses needed to protect Central and Eastern Europe, per the FT.
• A NATO official said their air defense "stockpiles have been reduced."
• Putin hinted on Tuesday that he might attack NATO members calling for Ukrainian strikes on Russia.

Central and Eastern European countries may find themselves vulnerable during an invasion because of NATO's weak air defenses, per a new report from the Financial Times.

Members of the military alliance only have less than 5% of the air defense capabilities needed to protect those regions from attacks, the FT reported on Wednesday, citing people familiar with NATO's defense plans.

When asked about the report, a NATO official told the FT that its "capability targets and defense plans are classified" but noted that its air defense "stockpiles have been reduced."

"NATO's new defense plans also significantly increase air and missile defense requirements in quantity and readiness," the official told the outlet.

The official added that the organization is confident its deterrence against Russia "remains strong."

Representatives for NATO didn't immediately respond to a request for comment from BI sent outside regular business hours.

The FT's report comes amid heightened concerns that NATO could find itself at war with Russia following the latter's invasion of Ukraine in 2022.

In February, Estonia's foreign intelligence service said it expects a "significant increase in Russian forces near the Estonian border in the coming years."

"The Kremlin is probably anticipating a possible conflict with NATO within the next decade," the intelligence agency said.

On Tuesday, Russian leader Vladimir Putin hinted that Russia could retaliate against European countries that are calling for Ukraine to attack Russia directly.

"So, these officials from NATO countries, especially the ones based in Europe, particularly in small European countries, should be fully aware of what is at stake," Putin told reporters.

"They should keep in mind that theirs are small and densely populated countries, which is a factor to reckon with before they start talking about striking deep into the Russian territory," he said. "This unending escalation can lead to serious consequences."

• A court in Tianjin sentenced a former executive for a state-owned firm to death for bribery on Tuesday.
• Bai Tianhui was found guilty of accepting bribes worth $151 million.
• The authorities said he helped solve several other crimes but wouldn't get a lighter sentence for that.

A former senior banker for a Chinese state-owned asset management firm has been sentenced to death for bribery, a court in Tianjin said on Tuesday.

Bai Tianhui, an ex-general manager of China Huarong International Holdings, was found guilty of taking bribes worth $151 million from 2014 to 2018, the court wrote in an announcement.

Authorities said Bai had abused his position as a holder of various appointments at his firm and accepted bribes involved with project acquisitions and corporate financing.

The court said Bai took "extremely huge" bribes and that the "circumstances of the crime were extremely serious, and the social impact was extremely bad."

It added that the disgraced former manager cooperated with authorities to help expose and solve other "major crimes."

Despite Bai providing what the court said were "great contributions," it said the magnitude of his crimes was so great he would not receive a lighter sentence.

Execution for corruption in China is generally rare, and those who have received such a sentence are usually deemed to have cost the country considerable resources through their crimes. Bai is the second former Huarong executive to be handed the death sentence.

Lai Xiaomin, who was chairman of the firm, was executed in 2021 after being found guilty of graft involving about $277 million. He was also charged with bigamy and fathering two illegitimate children.

A Tianjin court sentenced Lai to death on January 5 of that year, and he was executed by the end of the month after his appeal was rejected.

State media didn't say if Bai intends to appeal, but it's also rare for death sentences in China to be overturned. One former vice-mayor, Zhang Zhongsheng, was given life imprisonment after appealing his death sentence for bribes involving $160 million.

All of Bai's personal property will be confiscated, the Tianjian court said on Tuesday.

Bai and several of his top colleagues, including Lai, were put under investigation by China's graft watchdog, the Central Commission for Discipline Inspection, in 2018.

Four other Huarong executives are still scheduled for trial.

Bai's execution comes amid a renewed push to stamp out corruption in China's financial system, with Hong Kong-based South China Morning Post reporting that over 30 top financial executives and state officials were arrested in 2024 alone.

The anti-graft measures fall under the shadow of Chinese leader Xi Jinping's announced ambition for China to be a "financial superpower" and his decadelong campaign to weed out corruption in the country.

In conjunction with the crackdown, state media regularly produces documentaries highlighting the financial crimes of those caught for corruption.

Lai appears in one film that aired in 2020, which features footage of a secret vault in an apartment filled with cash that his friends called the "supermarket." Bai also appears in the documentary.

• Sam Altman is thinking about restructuring OpenAI, per The Information.
• The OpenAI CEO is considering turning the ChatGPT maker into a regular, for-profit company. 
• OpenAI is now run as a "capped-profit" company, where its for-profit arm is governed by a nonprofit.

OpenAI CEO Sam Altman is thinking about restructuring the ChatGPT maker.

The 39-year-old Stanford dropout has talked about turning OpenAI into a regular, for-profit company, The Information reported on Wednesday, citing an individual who'd spoken to Altman.

Unlike most companies, OpenAI says it is run as a "capped-profit" company, with its for-profit arm governed by a nonprofit.

The company announced in a March 2019 blog post that it was shedding its status as a typical nonprofit to better realize its mission of building safe artificial general intelligence (AGI) for the world.

"We want to increase our ability to raise capital while still serving our mission, and no pre-existing legal structure we know of strikes the right balance," OpenAI wrote. "Our solution is to create OpenAI LP as a hybrid of a for-profit and nonprofit—which we are calling a 'capped-profit' company."

Representatives for OpenAI didn't respond to The Information's request for comment.

Altman's leadership of the Microsoft-backed AI upstart has not been without controversy. In November, Altman was briefly ousted after OpenAI's former board alleged that he was "not consistently candid in his communications" with them.

"For years, Sam had made it really difficult for the board to actually do that job by withholding information, misrepresenting things that were happening at the company, in some cases outright lying to the board," former OpenAI board member Helen Toner said in an interview on "The TED AI Show" podcast that aired Tuesday.

Toner said Altman was a deceptive figure who lied and hid information from the board "multiple" times. According to Toner, OpenAI's board was kept in the dark about ChatGPT's release in November 2022.

Instead, the board only learned about the chatbot's existence, like everybody else, when news of its release began spreading on Twitter.

Toner, who left the board shortly after Altman was reinstated as CEO, also accused him of lying about his financial interests in OpenAI.

"Sam didn't inform the board that he owned the OpenAI Startup Fund, even though he constantly was claiming to be an independent board member with no financial interest in the company," Toner said, referencing the company's venture capital fund for AI startups.

On March 29, OpenAI revealed in an SEC filing that Altman no longer owned or controlled the venture capital fund.

The company said in a statement to Axios that the fund's initial ownership structure was a "temporary arrangement, and involved no personal investment or financial interest from Sam."

"We are disappointed that Ms. Toner continues to revisit these issues," OpenAI chairman Bret Taylor said in a statement to the podcast. "Our focus remains on moving forward and pursuing OpenAI's mission to ensure AGI benefits all of humanity."

Representatives for OpenAI didn't immediately respond to a request for comment from BI sent outside regular business hours.