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China is ditching the dollar, fast: Officials believe the yuan has come of age

economist.com

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Re: China is ditching the dollar, fast: Officials believe the yuan has come of age

#31

Post by vintermann »

rdm_blackhole wrote: post #23
atonse wrote: post #16

Earlier quoted context omitted.

For all of its current very high profile issues of uncertainty in the US, who would actually trust China in any way shape or form as an alternative? It’s a totalitarian state who has been jailing its wealthiest businesspeople on a whim, causing many to flee, and it’s about to embark on an invasion of its peaceful neighbor. Which part of any of that screams “that currency will be a stable place to store my money?”

> For all of its current very high profile issues of uncertainty in the US, who would actually trust China in any way shape or form as an alternative? People would trust China for the same reason people still trust the US after it invaded 2 countries in the middle east for no reason whatsoever and decided to imprison 2 million of it's citizens at any given time. If tomorrow there are better prospects of making money…

> People would trust China for the same reason

I don't necessarily disagree, but can you explain why you think it is, that people keep trusting powerful states which keep giving plenty of reasons to not be trusted?

Re: China is ditching the dollar, fast: Officials believe the yuan has come of age

#32

Post by ccakes »

vintermann wrote: post #31
rdm_blackhole wrote: post #23

Earlier quoted context omitted.

> For all of its current very high profile issues of uncertainty in the US, who would actually trust China in any way shape or form as an alternative? People would trust China for the same reason people still trust the US after it invaded 2 countries in the middle east for no reason whatsoever and decided to imprison 2 million of it's citizens at any given time. If tomorrow there are better prospects of making money…

> People would trust China for the same reason I don't necessarily disagree, but can you explain why you think it is, that people keep trusting powerful states which keep giving plenty of reasons to not be trusted?

Because money is the priority for those people. If they can make more money by operating in a different regime then they will, the moral or political stance of that regime isn’t really relevant

Re: China is ditching the dollar, fast: Officials believe the yuan has come of age

#33

Post by rdm_blackhole »

vintermann wrote: post #31
rdm_blackhole wrote: post #23

Earlier quoted context omitted.

> For all of its current very high profile issues of uncertainty in the US, who would actually trust China in any way shape or form as an alternative? People would trust China for the same reason people still trust the US after it invaded 2 countries in the middle east for no reason whatsoever and decided to imprison 2 million of it's citizens at any given time. If tomorrow there are better prospects of making money…

> People would trust China for the same reason I don't necessarily disagree, but can you explain why you think it is, that people keep trusting powerful states which keep giving plenty of reasons to not be trusted?

People trust powerful states who might occasional do shitty things because they tend to assert their dominance when necessary.

You can see that clearly now with how the EU completely messed up their negotiations with Trump regarding the tariffs.

If you are an investor and you are given the chance to invest in two companies, one of them located in a country that is not afraid of throwing it's weight around to get things done or defend it's interests and the other who might have a better record in terms of human rights but doesn't want to appear too aggressive, which one do you pick?

If the only thing you care about is ROI then the answer is easy. Is it right? Probably not but that is just the world we live in and the system that we are all part of.

Obviously this is a simplified example but you get the gist.

Personally I think that the problem with the USD is that it can be used as a weapon against other countries. Why would China risk being cut off from the global banking system like Russia was? It simply makes no sense.

Cutting Russia from SWIFT was major mistake.

It only reinforced what China and other countries already knew, that is, that it can be weaponized in an instant. That in turns means that we should see a decrease in the USD dominance and a shift away from the traditional big players like SWIFT in favor of other home grown systems like CIPS.

Re: China is ditching the dollar, fast: Officials believe the yuan has come of age

#34

Post by arisAlexis »

mertbio wrote: post #21
atonse wrote: post #16

Earlier quoted context omitted.

For all of its current very high profile issues of uncertainty in the US, who would actually trust China in any way shape or form as an alternative? It’s a totalitarian state who has been jailing its wealthiest businesspeople on a whim, causing many to flee, and it’s about to embark on an invasion of its peaceful neighbor. Which part of any of that screams “that currency will be a stable place to store my money?”

> who would actually trust China in any way shape or form as an alternative? Most of the Asian countries (except South Korea, Japan and Taiwan) and African countries. They’re already getting tons of investments and loans from China.

Like Philippines that are almost at war with China? Or India that have regular skirmishes with them? Who exactly in Asia? Is Shri Lanka important for world economy?

Re: China is ditching the dollar, fast: Officials believe the yuan has come of age

#35

Post by arisAlexis »

rootsudo wrote: post #26
atonse wrote: post #16

Earlier quoted context omitted.

For all of its current very high profile issues of uncertainty in the US, who would actually trust China in any way shape or form as an alternative? It’s a totalitarian state who has been jailing its wealthiest businesspeople on a whim, causing many to flee, and it’s about to embark on an invasion of its peaceful neighbor. Which part of any of that screams “that currency will be a stable place to store my money?”

"It’s a totalitarian state who has been jailing its wealthiest businesspeople on a whim, causing many to flee, and it’s about to embark on an invasion of its peaceful neighbor." To be fair and very frank: the USA does the same things Peaceful neighbor: greenland or mexico (sure the cartel related violence but it isn't per se state.) Jack MA is the famous chinesse example, but it was close enough for bill gates, howar…

How was Zuckerberg close to being in jail or abducted by the state please explain

Re: China is ditching the dollar, fast: Officials believe the yuan has come of age

#36

Post by arisAlexis »

tnt128 wrote: post #19
intalentive wrote: post #7

World reserve currency status follows the leader in manufacturing and trade. Maintaining dollar hegemony was never going to be feasible after de-industrialization, but short-sighted decisions like weaponizing SWIFT have accelerated its decline. As the dollar is gradually shunted out of world trade, the US will be less able to export its inflation abroad. The implications won’t be pretty.

Would you care to elaborate? Why does it have to follow the leader in manufacturing? shouldnt the world reserve currency also be the most available? If it’s not dollar then what’s the alternative? Yuan isn’t an open currency, impossible for it to replace dollars as the world reserve currency.

This can be replaced by the most dominant in AI maybe

Re: China is ditching the dollar, fast: Officials believe the yuan has come of age

#38

Post by [deleted] »

unearth3d wrote: post #17
nradov wrote: post #15

Earlier quoted context omitted.

It's nonsense to claim that the USA is a particularly violent country. Since 1776, the per capita rate of violent deaths has been lower than Europe or China.

What happens with those figures if war is removed from the data? US Euro compare 2000 to 2000: https://ourworldindata.org/data-insights/since-2000-homicide...

[deleted]

Re: China is ditching the dollar, fast: Officials believe the yuan has come of age

#39

Post by atonse »

scrubs wrote: post #27
atonse wrote: post #16

Earlier quoted context omitted.

For all of its current very high profile issues of uncertainty in the US, who would actually trust China in any way shape or form as an alternative? It’s a totalitarian state who has been jailing its wealthiest businesspeople on a whim, causing many to flee, and it’s about to embark on an invasion of its peaceful neighbor. Which part of any of that screams “that currency will be a stable place to store my money?”

I hear you on China loud and clear, however the balance of focus must be on us, the US, not shooting ourself in the face anymore. Debt, current account deficit, and interest payments have got to get in order. Our house needs to get in order by us for us.

Totally agree. I just took issue with the idea that China’s currency would somehow be more stable.

Re: China is ditching the dollar, fast: Officials believe the yuan has come of age

#40

Post by maxglute »

People wank about "stability and convertibility" for reserve currency, but the real story is USD strong because USD profitable. US can internationalize domestic crisis, blow up countries, stir foreign instability "paradoxically" global investors pile into the dollar safe haven. The foundation of that is investors trust FED will ensure USD more profitable on stabilized basis than alternatives, regardless of problems, foreign or domestic, and overtime this accumulates into uncontestably deep liquidity that sustains reserve currency. But that's also mechanism of baseline Triffin bind: the U.S. runs deficits to supply dollars abroad to maintain reserve status, if Trump (because that's what he's signalling) deliberately abandons USD ROI credibility and sustains it, like weak-dollar policy (for muh exports, how how investors lose 30c on the dollar), reserve demand unravels or debt servicing increases even more. AKA USD can survive almost any external crises, but internal sabotage i.e. sustained deliberate devaluation will erode profitability (safety) / liquidity premium -> feedback loop of weaker demand, higher yields, both bad. Reserve demand only works when the FED isn't captured for policy that undermines USD premium / mercantilist FX gaming and US eats Triffin that may or may not be good for Americans.

At end of the day PRC doesn't want RMB as reserve - they don't want Triffin either. They just want insulation from USD weaponization while the U.S. is sanction-happy and forced into erratic policy trying to "solve" its structural bind by making foreigners eat the cost. The real Chinese play is to build RMB strength at home while the U.S. either burns the dollar to dig out of the debt hole, imposing losses on global investors, or keeps digging until debt service alone paralyzes U.S. policy capacity, already visible in constraints on defense procurement, i.e. airforce / naval capitalization. That paralysis is the bigger strategic win than simply ending USD reserve status.

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