China has also been arranging currency swaps with trading partners to bypass the US dollar in trade settlements. Since mid-December, China has signed currency swap contracts worth 650 billion yuan (about US$95.6 billion) with six central banks in Hong Kong, the Republic of Korea, Malaysia, Belarus, Indonesia and Argentina.

These swap accords allow other overseas central banks to lend yuan to local importers who want to buy Chinese goods. Since these deals bypass the US dollar, they reduce exposure to exchange-rate volatility and cut transaction costs for both parties.

Chen said these deals "expand the yuan's use in the region and pave the way for its global acceptance."

The rules are also good for Chinese exporters, who have long had to bill their foreign customers mainly in US dollars.

Last December, China announced pilot programs to settle trade deals in yuan between the country's two economic powerhouses, Guangdong Province and the Yangtze River Delta (which includes Shanghai) and the two special administrative regions of Hong Kong and Macao. Trade value among these regions comprised more than half of the country's total last year.

A similar arrangement has been proposed for exporters in Guangxi Zhuang Autonomous Region and Yunnan Province in southwestern China, which will be allowed to use the yuan to settle trade with the Association of Southeast Asian Nations members starting this year. Details of that program haven't yet been disclosed, but experts told Xinhua that it would be yet another step leading to greater use of the yuan offshore.

Smaller arrangements using the yuan in trade actually date back to the 1990s and involve eight close neighbors such as Vietnam, Nepal and Russia. Last year, trade worth 23 billion yuan was settled in yuan between China and these eight border nations.

But at the equivalent of about US$3.4 billion, that was only a minute portion of the trade between China and those countries last year, which was expected to be at least US$95.48 billion.

US still has clout

As the largest creditor of the United States, China has made several recent comments on its concern about the safety of its US dollar assets.

For example, Hu has called for "enhanced supervision" of the macroeconomic policies of various countries, the major reserve currency-issuing nations in particular, with a special focus on their monetary policy.

Zhou Xiaochuan, governor of the People's Bank of China (PBOC), the central bank, last month called for a super-sovereign currency to end the US dollar's dominance as an international reserve currency. Zhou suggested overhauling the global monetary system by boosting the use of Special Drawing Rights (SDRs, a monetary unit used by the International Monetary Fund) as an alternative to the US dollar.

His proposal sparked heated discussion among world leaders, but so far, there has been more talk than action. Zhou's idea was supported by Russia and Brazil, but it was dismissed by US President Barack Obama, who said he did not believe there was a need for a global currency.