China has supposedly been trying to make their own system. The big problem with that, as I understand it, is that they have massive currency controls - people and companies outside China aren't generally allowed to buy and hold their internal currency, and people within China aren't generally permitted to take it out the country or exchange it for other currencies, with some exceptions that have been clamped down on heavily in the last few years. That means they're not a terribly attractive option as the big central clearinghouse for international payments compared to US dollars.

Maybe, and if they succeed, what will the US do then? This is a terrifying path.

That own system needs participants to be useful for international deals, and USA can extend the same embargo to that new system, so that all financial institutions have to choose whether they break the embargo, participate in the Chinese system and be banned from the main USD systems, or pretend that the Chinese system does not exist and keep all their non-Chinese business functioning.

If you're trading internationally, and have to denominate on a given currency, would you use the one backed by China, or the one backed by the US? Would you use a new currency with nothing yet denominated in it, or the one in which trillions of assets are denominated into? The one backed by a legal system that in the end is a reflection of the whims of a single ruling, communist party with an inaccessible and arbitrary hierarchy, or the one backed by the, yes, imperfect, but still pretty much free and open legal system?

It's never about the actual money. Or the technical aspect of it. It's about trust.

More like accelerating their efforts to make a new system.