China’s latest effort to bring on a post-dollar reserve-currency world took a big step forward April 12. Bank of France Governor Christian Noyer announced that France and China will set up a currency swap line to allow French companies to bypass the U.S. dollar for trade.

The idea is to turn France into the major offshore Chinese currency trading hub—and to challenge London as the European center for access to Chinese capital.

The announcement followed a similar but smaller move by the Bank of England earlier this year to set up a three-year yuan-sterling swap line with China.

According to Reuters, France may soon become the center of focus for yuan trading—despite Britain’s reputation as a center of global finance. The total value of offshore yuan-denominated bonds issued by French corporations is nearly twice the value of bonds issued by their British counterparts.

The China Daily reports that 50 percent of French companies have used yuan-denominated products and services.

“France’s historic relationship with Africa, and its favorable geographical location, also makes Paris a natural hub for [yuan] trading in the Sino-African business flows that are traded through Paris,” says Arnaud de Bresson, chief executive of Paris Europlace, a marketing group that promotes France’s financial industry.

As important as it is for France to increase trade with China, especially as Europe struggles through its debt crisis, this deal may prove to be even more important to China as it wages its currency campaign to remove the dollar as the world’s reserve currency.

Over the past two years, China has announced a string of yuan internationalization efforts that are systematically chipping away at the dollar’s importance to global trade. Financial blog Zero Hedge reports: “One more domino in the dollar reserve supremacy regime falls. [T]he announcement two weeks ago that ‘Australia and China Will Enable Direct Currency Convertibility’ … was the culmination of two years of yuan internationalization efforts as summarized by the following”:

“World’s Second- (China) and Third-Largest (Japan) Economies to Bypass Dollar, Engage in Direct Currency Trade””China, Russia Drop Dollar in Bilateral Trade””China and Iran to Bypass Dollar, Plan Oil Barter System””India and Japan Sign New $15bn Currency Swap Agreement””Iran, Russia Replace Dollar With Rial, Ruble in Trade, Fars Says””India Joins Asian Dollar Exclusion Zone, Will Transact With Iran in Rupees””The USD Trap Is Closing: Dollar Exclusion Zone Crosses the Pacific as Brazil Signs China Currency Swap”

The prospect of 317 million members of the eurozone eventually conducting trade in yuans instead of dollars for bilateral trade will be a massive boost to China. In turn, France has positioned itself as China’s doorway to Europe—and the largest economic market in the world.

France may also unintentionally open the door for the dollar’s destruction.

What will happen to the dollar when, over time, all those European countries realize dollars are no longer needed to conduct what amounts to around 30 percent of global trade? The need to keep as many U.S. dollars in reserve will evaporate.

The simple economic laws of supply and demand will then kick in. Those unneeded dollars will come flooding back on the market. Dollars not sold will be spent snapping up American corporations and income-producing assets. And the dollar’s value will tank.

More importantly, America’s ability to print dollars out of thin air to finance unsustainable spending and other “stimulus measures” will be drastically curtailed because a huge chunk of the world will no longer be locked into using and storing dollars.

America is “witnessing and living through some of the greatest and momentous changes in world economic history,” wrote economic analyst Richard Russell. “It will be, historically, tantamount to those of us who fought and lived through World War ii.”

Russell is right. A massive shift in the global economic order is on the way. New alliances are being formed, and America is about to be blindsided when many of its economic allies abandon it.

For information on why China and Europe are destined to join together in an anti-dollar alliance, read “The Great Mart.”