Yes, hence "medium/long term", though for me that's potential 10-20 year horizon.
> buy more trinkets
RMB buys capita goods, energy goods... and as PRC domestically moves way from oil, it still has massive refining/petchem infra generating surplus, so they'll likely be net hydrocarbon seller (refined products), as in RMB can even buy oil / oil products. This part important, 2025 PRC has parity/exceeded the US as worlds largest crude refiner by capacity. Together with massive, massive SPR for storage... aka they have like 1B+ barrels of oil in storage which gives them pricing power (as in they have artifical oil field to influences oil prices). They will not be retiring all the oil infra as they electrify, they'll use freed up surplus for reselling hydrocarbon in rmb. Right now, outside of high end commercial aviation and semi conductor, PRC can underwrite 99% of development goods for affordable prices. This not 10/20 years ago where countries still had to through host of western industries to get factory/city off ground, PRC more or less one stop shop now. The TLDR is rmb buys entire physical layer that enables modernity.
> credit rating system is still widely respected.
Respecting western credit rating =/= fear of being locked western credit rating. People don't default from eurodollar because they fear losing access to energy, food, commodities. Things already changed in the sense RU has demonstrated BRICS makes surviving outside of western finance system feasible. Fear is what enforces/maintains system. Respecting is about keeping options open not avoiding death sentence anymore.
>US dollars, not Yuan.
They're doing both, refinancing or inking new contracts in RMB. But main point is PRC shadow dollar lending is part of their dedollarization effort = getting rid of / recycling / lending their surplus USD at expense of US treasury. People may keep using USD, but US gov not getting exorbitant privilege. As long as USD is being used, and as long as PRC can maintain trade surplus, PRC can feasibly maintain pool of USD to ensure USD liquidity remains costly. It's like the oil/SPR reserve, PRC having pool of USD to reprocess/recycle gives them some pricing power to undermine oil/and USD.
>hyperinflation
IMO this more likely than not, and not really something to fear. Not end of society hyperinflation but if US debt gets too unsustainable, geopolitically much better to inflate away debt and fuck creditors than default. Like it's still reputationally technical/soft default, but less "embarassing", and more importantly, because dedollarization takes time, mechanically US can inflate debt faster than holders can ditch USD without crashing value. If things get desperate to that point, USD has the dollar is our currency but your problem nuclear option. Not saying this good for US, but least bad for US.