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China's more likely to suffer hyperinflation first, than become the go to currency. 1.) Yuan is being printed massively (it hit a credit-to-gdp ratio of 30 to

China's more likely to suffer hyperinflation first, than become the go to currency. 1.) Yuan is being printed massively (it hit a credit-to-gdp ratio of 30 to 1 http://www.bbc.com/news/business-37403363 http://www.bbc.com/news/business-37403363) 2.) it is a non-fully-convertible currency 3.) there are severe restrictions for yuan to move out of the country due to capital controls. max $50/year. also, $15k/year withdraw restrictions (http://money.cnn.com/2015/09/30/news/china-overseas-atm-cash-limits/ http://money.cnn.com/2015/09/30/news/china-overseas-atm-cash...) 4.) no one is required to use yuan for trade. 5.) nobody wants yuan outside China. people in China are desperate to exchange yuan for other things inside China. All the conditions are there for hyperinflation to occur. Might happen early next year when europe and China both likely reject China's market economy status, and starts imposing tariff on Chinese imports heavily.

ktRolster 10y ago
when europe and China both likely reject China's market economy status, What does that mean?
- adventured 10y ago
  More information on what's going on: http://www.reuters.com/article/us-china-usa-trade-idUSKCN0ZU1VU http://www.reuters.com/article/us-china-usa-trade-idUSKCN0ZU... http://thediplomat.com/2016/07/market-economy-status-for-china-the-views-from-brussels-and-beijing/ http://thediplomat.com/2016/07/market-economy-status-for-chi... The argument is essentially that China's economy doesn't function as a proper market economy. That too much of its economy is directly governed by State controlled or owned corporations. That prices in its economy don't function enough based on market influences. An example of this would be their vast dumping of steel and some other industrial products, while their government continues to directly subsidize the dramatic over-production despite large losses in the steel industry.
  - jorgecastillo 10y ago
    >The argument is essentially that China's economy doesn't function as a proper market economy. Which is true. I really hope this happens, it's time for China to start playing by the rules of a real market economy or lose access to the global market. We should not tolerate China subsidizing their industry, at the expense of other industrial countries.
mempko 10y ago
hyperinflation happens when there are supply side restrictions. I'm guessing if there are any resource supply shocks like oil or metal, etc. However, this is true of any country. Fortunately for China, at least in production capacity, China has no worry here.

ktRolster 10y ago

when europe and China both likely reject China's market economy status, What does that mean?

adventured 10y ago
More information on what's going on: http://www.reuters.com/article/us-china-usa-trade-idUSKCN0ZU1VU http://www.reuters.com/article/us-china-usa-trade-idUSKCN0ZU... http://thediplomat.com/2016/07/market-economy-status-for-china-the-views-from-brussels-and-beijing/ http://thediplomat.com/2016/07/market-economy-status-for-chi... The argument is essentially that China's economy doesn't function as a proper market economy. That too much of its economy is directly governed by State controlled or owned corporations. That prices in its economy don't function enough based on market influences. An example of this would be their vast dumping of steel and some other industrial products, while their government continues to directly subsidize the dramatic over-production despite large losses in the steel industry.
- jorgecastillo 10y ago
  >The argument is essentially that China's economy doesn't function as a proper market economy. Which is true. I really hope this happens, it's time for China to start playing by the rules of a real market economy or lose access to the global market. We should not tolerate China subsidizing their industry, at the expense of other industrial countries.

mempko 10y ago

hyperinflation happens when there are supply side restrictions. I'm guessing if there are any resource supply shocks like oil or metal, etc. However, this is true of any country. Fortunately for China, at least in production capacity, China has no worry here.