China is creating a cryptocurrency to eliminate the mediation of US dollars.
China will continue to bet on the US dollar. For a very simple reason: Besides Japan, China owns most of the US government bonds and thus indirectly also USD. If China were to break away from the US dollar, they would sell the government bonds first, which according to current official figures they are not doing. For commercial transactions, it may make sense not to rely on a foreign fiat currency as an intermediate currency and to build an own electronic system. The only question is whether this can prevail. Because then all other countries that trade with China must also use the cryptocurrency and no longer the USD.
Owning US government bonds or foreign currency reserves has nothing to do with finding an outlet for the dollar. Imagine that bonds and foreign currencies are like their holdings, they don't circulate. A bounce in the US dollar will cause a drop in dollar liquidity.
Combining the amount of US assets it holds and the low dollar liquidity, China could threaten to devalue the dollar.
The plot is very clear.
Chinese cryptocurrencies are not yet launched but I believe China will have a way for other countries to use them.
Firstly, your username is hilarious op. Gutsy and straightforward. Coming to the topic, China is a very ambitious country with lofty goals which everyone are aware of and they have demonstrated this time and time again.
They can try to get rid of the dollar, but they will fail most likely and get mocked into oblivion if they do so which is why this isn't feasible for them and they are aware of this.
China paves the way and other countries will embrace the creation of cryptocurrencies. By companies that are abroad, they will be bringing their digital currency to the world.
I have seen them develop cashless payments with apps like Wechat, Alipay before. Countries in the region have been asking to follow in China's footsteps in monetary reform. Alipay has a presence in the US, not only replacing payment methods but also receiving a large amount of user data.