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China is ditching the dollar, fast: Officials believe the yuan has come of age
- Herring 1y agoBest news I've heard all year. Competition keeps you sharp. Monopolies lead to stagnation and abuse.
- ndsipa_pomu 1y agoThis sounds to me like swapping one monopoly for another
- Herring 1y agoCause you lack imagination. You'll have to sharpen that up too. Have you tried not antagonizing your allies?
- tsoukase 1y agoWhile in decline or development of a country, education comes first, the rest sectors follow and currency as world reserve comes last. We seem to be at the middle stage for US and China, the former going down, the latter up. Top world currency change will come sometime.
- hn_throw_250910 1y ago[dead]
- mitchbob 1y agohttps://archive.ph/7Zeti https://archive.ph/7Zeti
- austin-cheney 1y agoOh, the joys of isolationism.
- nine_zeros 1y agoIlluminating article. And if the yuan bonds information is real, it won't even take 4 years for a lot of global finance to move away from the dollar. It might be tough for the US to accept the higher cost of global resources (and thus become a poorer country) but maybe this gradual decline in dollars status is what the administration hopes is the best case.
- adamnemecek 1y agoKinda like the UK.
- mountainriver 1y agoLots of similarities, almost like you could predict it by reading history
- nickstambaugh 1y agoThat would require people to read history, which is becoming more & more of a pipe dream.
- nine_zeros 1y agoMaybe like the UK but the problem with the US is that the US is a violent country. Lower standard of living is likely to cause violence. UK literally just lost all the colonial wealth but came together to build itself again. In many ways, the US is a spiral descent culture while the UK lost is all and ascended again but to lower levels.
- nradov 1y agoIt'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.
- deleted 1y ago[deleted]
- intalentive 1y agoWorld 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.
- Nevermark 1y agoYes, letting the Ukraine related sanctions chronically fester is a tremendous strategic error. The benefits of leverage are dramatically maximized and reinforced by using them as little as possible, on the fewest targets as possible, for the shortest intervals possible, to obtain the most decisive results as possible. Helping an ally interminably not lose on the battlefield (instead of supporting a win), is also a leverage destroying strategic error. There goes significant deterrence. And to triple down, the US has expanded its sanctions (er, tariffs) to all its enemies (uh, trading partners), giving everyone strong signals that no relief is coming, other than to back away from the US. Leverage that took a couple centuries to achieve is hemorrhaging. And we are living in a Kurt Vonnegut novel.
- lisbbb 1y agoYou're so defeatist. The US could turn things around and in fact, is. The problem with China is that you can't trust anything there--their bonds are garbage, their equities, same.
- arunabha 1y agoThe issue is, the current administration seems to be hell bent on speed running the course to a similar destination. The overt attempts to politicize the Fed and key govt institutions has sown the seeds to distrust in US govt data and monetary policy. Whether we water and fertilize the seeds, or let them dry and wither will decide the level of credibility we get in the future. Strong institutions are absolutely critical for long term economic success. Enforcement of the rule of law, accurate data and credible monetary policy are the bedrock on which long term economic prosperity is built. Right now, we seem to be taking a jackhammer to that foundation.
- nextworddev 1y agoWhenever the economist writes a thesis, bet the other way
- dh2022 1y agoI stopped reading the Economist a few years ago for this exact reason. It looks like it is still the case. Any article mentioning reserve currency without mentioning Triffin dilemma is not serious. Any article mentioning how US dollar will lose its reserve status without mentioning how the Euro (a large liquid currency with no capital controls and 3 decades of existence ) did not takeover is even less serious. Any reporter claiming RMB is the next world currency never tried to wire a dividend payment out of China.
- seanmcdirmid 1y agoSo is China going to finally let the Yuan fully float and get rid of exchange controls? That's when you know the yuan has really come of age...when you don't need special documentation to convert your yuan into dollars or euros. But something really needs to replace the petro dollar, especially as chinese EV and clean energy tech production reduces or eliminates the need for having a petro dollar at all in most of the world.
- refurb 1y agoThis. All the talk about about trade or industrial might is pointless if the Yuan isn’t fully convertible and the exchange rate floats. And China isn’t going to do that any time soon because of capital flight out of China and the artificially low Yuan pumps exports.
- franktankbank 1y agoGood for their Citizens then. Take your time China, elevate your middle class with your economic might and show the world what you can become. Falling into the economic trap of what becomes open borders may not be in your favor past a few generations of the upper class.
- seanmcdirmid 1y agoIt is a mixed bag for citizens. If they want to go abroad or buy something abroad, they have to go through a complex dance to get the dollars they need. In the past this was harder, then easier, then harder again...so whatever. It makes moving abroad more appealing to some Chinese (so they can earn a convertible currency rather than yuan), which isn't ideal for the Chinese government. I definitely don't think they should move to a convertible currency without a more stable financial system. They also rely on yuan being saved in China (because you can't invest your money easily outside) to drive cheaper investment capital in China.
- refurb 1y agoWhat does open borders have to do with currency?
- ychan268 1y agoThis article is more like anti-trump rather than promoting yuan, just look at swift proportion
- tempodox 1y agoTrump’s sledgehammer orgy has only just begun and it’s already hard to imagine anything but a catastrophic outcome. He and his gang have still more than 3 years left (at the minimum) to continue their work of destruction. Everyone with an ounce of self-preservation instinct will distance themselves as far as possible.
- maxglute 1y agoPeople 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.