China is making a direct play to weaken the dollar's grip on North America while cracks widen in the US AI debt market, and both trends are bad news for Washington.

• China is selling yuan bonds in Canada for the first time ever, letting Canadian investors swap dollars for Chinese currency without opening accounts in China.
• Big Western banks like Citigroup, Barclays, BNP, and JPMorgan are increasingly borrowing in yuan instead of dollars, since Chinese borrowing costs are far cheaper.
• Growing trade between Canada and China, including oil sales, means more yuan flowing around the world, which feeds demand for more Chinese bonds.
• Meanwhile banks like ING are quietly selling off loans tied to AI data centers, worried that stalled construction could lead to defaults on debt owed by companies like OpenAI and Oracle.
• Private credit giants such as Apollo and KKR hold huge piles of this AI debt, and a slowdown in data center buildouts could trigger a much bigger credit crunch that spreads through banks and pension funds.

Outlook: Expect more yuan-denominated borrowing and bond sales as China chips away at dollar dominance, while AI debt worries keep building toward a possible credit shock in the US financial system.