Can the yuan dethrone the US dollar as the world’s reserve currency?

[BHAN85]

when you buy aliexpress things, Chinese sellers ask you USA dollars, they dont ask Chinese RMB, and I'm talking buying from the EU, they dont want EUR, they exchange the EUR to USD, they dont exchange to RMB.

 

[dbc]

China literally built 30,000 miles of high speed rail in 15 years while California spent billions to not even complete a tiny portion of their high speed rail project before shelving it.

You do know that the Chinese state rail has a debt of over a trillion dollars and all but 3 or 4 lines connecting tier 1 cities is running at a loss.

 

[tower9]

You do know that the Chinese state rail has a debt of over a trillion dollars and all but 3 or 4 lines connecting tier 1 cities is running at a loss.

It is running at a loss because the infrastructure itself was not built to be a profit making vehicle but was meant to spur economic growth, geographic integration and the facilitation of mega-urban regions, which it has done incredibly successfully.

 

[dbc]

It is running at a loss because the infrastructure itself was not built to be a profit making vehicle but was meant to spur economic growth, geographic integration and the facilitation of mega-urban regions, which it has done incredibly successfully.

outside of connected tier 1 cities those benefits haven't materialized. Excerpts from a study conducted by Jinan University.

For areas that have formed high-speed rail networks, high-speed rail has compressed the space-time distance and promoted exchanges and cooperation among cities, which has had a positive effect. For areas with a relatively backward development of high-speed railways, high-speed rail has exacerbated its marginalization and has had a negative impact. On the whole, high-speed rail has a negative effect on the overall economic growth.

 

[jhungary]

We only need to weaken the status of the USA and the dollar, rather than destroy it.

We only need to change some of the current order, reduce war and violence, and obtain a better trade environment.

explain to me how you can "weaken" USD but not destroy it? That's the third time I have heard this in this post alone. How does it even work?

I mean drop US reserve below 50%? How about 40? how about 30%, so say for China 3 trillion $ Forex, you r goal is to for US to hold 1.2 trillion Chinese Forex ransom (@ 40% reserve) or 900 billions ransom (if you are talking about 30% reserve status) instead of 1.8 trillion ransom (@ current 59%)

On the other hand, even if that is your plan, it may work for you, it may not work for other country, especially those in the west, because you may be able to hold out at that level, other counties don't have trillion dollars Forex to take the heat, so are you going to ask for them to do suicide for you if you are not replacing their USD with Yuan? Or you want EU or some other currency to do it? You can't drop USD level and don't replace it with something else

On the other hand, would you think US would make USD readily tradable for you to "Obtain a better trade environment? What is the basis you are basing this on? If I am the US government, the day USD loses its dominance and I can't use my USD to dictate world monetary policy is the day I will severely limit currency right so you can't build a better trade environment, I mean, you either step up or I am out. I won't stick around because I am a nice guy in the bottom of my heart it wants to help you to achieve a "better trade environment". For what? Honestly, if I can't dictate term, I would want to be no part in it, as there are nothing in it for me.

I understand completely what the Chinese way of thinking, on the other hand, you don't seem to understand the western way of thinking. What you are saying is nothing but some utopian BS. In the west, everything they do is for a reason, if USD is not going to be dominating the currency market, they won't do shit on just about anything, and you expect them to corporate with you when you try to destroy their dominance?

LOL

The yuan will one of top reserve currencies.
Dollar, euros, yuan as top 3
The second tier will be Yen, Swiss franc, Sterling, Singapore dollar.

That changes nothing, i still don't see how China "win" if they were top 3. If so, weren't EU "won" a long time ago?

 

[jhungary]

I mean if you guys really believe so, we can come back a few months and see the statistics for next quarter. Or better still, prove it with your action by shorting the USD and longing the CNY.

I don't think you can long the CNY......

They can't be traded, I mean you can but it will be extremely complicated and difficult to.

 

[jhungary]

You don’t get it and you won’t til you’re paying $20 for a loaf of bread. And you’d probably think nothings changed by then either.

Ok dude. I don’t like to waste time doing pointless things.

What pointless is you really don't understand the reason why the inflation hit the US and WORLDWIDE. This is not because of currency or oil or even war in Ukraine, this is because the stagnate economic and we need to readjust from Pandemic level of trade back to normal trade.

With everything suddenly come back online, you can't retool your production to follow the lead back to normal level, because it takes time, which means whoever have more money will get the item first.

Case in point, do you know why PlayStation 5 have inflated nearly 100% at $1000 a pop (RRP 599) immediately after the pandemic between 2021-2022? That's not because Sony don't have enough money to make them, nor not enough oil to make them, that's because they are simply assembly stuff, and with shipment of CB or chips or what have you delay from Taiwan, Thailand and so on, they can't make enough to satisfy the market, and just because you can't make enough does not mean you don't have a market, hence the price hike. This is very simple supply and demand theory.

The less step a process involved, the less inflation it would have, except for Primary Produce.

 

[jhungary]

It's about international trade, not China's domestic growth, China is the world biggest trader and top trading partner of most countries in the world, China is working on getting more countries to do trade with China with Yuan, one country at a time.

View attachment 924983

That's becasue trade have very little impact on Currency Market. As @Mista say, ever wonder why China dominant trade in the last 20 years but not currency market

Because trade are always two ways, you buy/sell, import/export, receive/pay there aren't really that much money changed hand in the end. Even with large deficit like US/China, you are still talking about sub 100 billions deficit (some 75 or 78 billions now, I can't remember the number on top of my head)

Yes, that seems like a big number to smaller countries, but to the top 10 in the basket, this number is nothing The total circulation of USD is around 23 trillion, total circulation of Euro is about 13 trillions Euro, even CYN have about 5 to 8 trillions in circulation, some 70 billions going one way or the other would not impact the entire currency regime. At the end of the day, all you need is to have that deficit ready, not the entire trade amount. Which mean country would only demand a small amount of currency for trade.

On the other hand, if we look at current transaction (like remittance, credit card payment, loan payment, line of credit stuff). That's another story , currency transaction happens around 8 trillions dollars worth a day, A SINLGE DAY. Which mean every single day, a packet of money would be transferred say from say Hong Kong to Australia and those packet make up 8 trillion trade a day, that is what currency are needed and you can't use either origin or destination currency because they don't spend Australian Dollars in Hong Kong and they don't spend Hong Kong dollars in Australia, you need a third currency that are common to put the value in during the transfer The problem is, you would want a currency that back these settlement, you want a stable currency, you want one that would not be fluctuated, because unlike trading, you don't have a tangible things to back that currency transaction as in I don't pay money for a phone, I pay money for money in currency transaction, and that solely depends on monetary policy of a country, that's why USD, not CYN was used, as long as this remain the norm, no matter how much trade volume China increase, it wouldn't be able to challenge the USD, because you only need a small amount of money to back up trade as it itself is backed up by the goods.

 

[beijingwalker]

That's becasue trade have very little impact on Currency Market. As @Mista say, ever wonder why China dominant trade in the last 20 years but not currency market

If more and more countries agree on trading with China with Yuan , China'll be fine, China doesn't mean to kill dollar in the first place, you are still talking about replacing dollar or becoming another dominant currency, it's not the case for China, China just settles for making yuan gaining more weight and becoming less susceptible to US sanctions.
Besides, when more and more countries settle trade with China with yuan, they'll switch some of the reserve currencies into yuan for trade, gradually yuan's weight will increase at the expense of dollar, China now is working on it, one country at a time.

You do know that the Chinese state rail has a debt of over a trillion dollars and all but 3 or 4 lines connecting tier 1 cities is running at a loss.

How many times that we have to tell you that China is a country always has an eye for the future and bigger picture, China never cares about if the railways can support itself financially, what China cares is how much the economic benefits the railways can bring to the local towns, cities and provinces. that gain is tens of times if not hundreds more than the cost of operating those railways, this is the reason you see booming economies in Chinese cities of all tiers.

 

[beijingwalker]

That's becasue trade have very little impact on Currency Market. As @Mista say, ever wonder why China dominant trade in the last 20 years but not currency market

China was the biggest commodity trading country for the past 6 years, not 20 years.

我国进出口规模首次突破40万亿元 连续6年保持世界第一货物贸易国地位_滚动新闻_中国政府网

2022年我国外贸进出口顶住多重超预期因素的冲击，进出口规模、质量、效益同步提升。全年进出口总值首次突破40万亿元关口，连续6年保持世界第一货物贸易国地位。

www.gov.cn

 

[beijingwalker]

US just slaps heavy sanctions against many countries in recent years especially after Ukraine war, it gives the jitters to many countries and they are scrambling to find solutions to protect their financial assets, dedollarisation is not only for China, it's a global trend now.

 

[jhungary]

If more and more countries agree on trading with China with Yuan , China'll be fine, China doesn't mean to kill dollar in the first place, you are still talking about replacing dollar or becoming another dominant currency, it's not the case for China, China just settles for making yuan gaining more weight and becoming less susceptible to US sanctions.
Besides, when more and more countries settle trade with China with yuan, they'll switch some of the reserve currencies into yuan for trade, gradually yuan's weight will increase at the expense of dollar, China now is working on it, one country at a time.

Again, you still failed to see the point.

What make you think US will let you or anyone else to use USD to trade if their money is no longer dictate policy?

You still think "It's all good, I just want them to be more equal" The question is, the USD is readily available because they are unequal, and whatever the gap you want the US to drop has to be compensated by another currency, as I said, US would not just do this as a courtesy at the bottom of their heart to stay in the basket so you can use their asset if they can no longer dominate.....

You can't just "Damage it a bit" either it would have no effect or if their dominance is gone, USD would just go away. How hard is it to understand no one will do anything if that does not benefit them. You want US not to in charge, then you CAN'T use their asset. I mean it's really not hard to understand.

China was the biggest commodity trading country for the past 6 years, not 20 years.

我国进出口规模首次突破40万亿元 连续6年保持世界第一货物贸易国地位_滚动新闻_中国政府网

2022年我国外贸进出口顶住多重超预期因素的冲击，进出口规模、质量、效益同步提升。全年进出口总值首次突破40万亿元关口，连续6年保持世界第一货物贸易国地位。

www.gov.cn

Dude, you don't start counting when you become number 1. I mean, are you the last place 7 years ago, if you only become number 1 six years ago? If you have share on the market, that affect the currency market, you don't need to be number 1 to have any effect...

 

[ARMalik]

Yuan will NOT replace US dollar. BRICS issued Digital currency backed by Gold will replace US dollar.

 

[beijingwalker]

Again, you still failed to see the point.

What make you think US will let you or anyone else to use USD to trade if their money is no longer dictate policy?

You still think "It's all good, I just want them to be more equal" The question is, the USD is readily available because they are unequal, and whatever the gap you want the US to drop has to be compensated by another currency, as I said, US would not just do this as a courtesy at the bottom of their heart to stay in the basket so you can use their asset if they can no longer dominate.....

You can't just "Damage it a bit" either it would have no effect or if their dominance is gone, USD would just go away. How hard is it to understand no one will do anything if that does not benefit them. You want US not to in charge, then you CAN'T use their asset. I mean it's really not hard to understand.

More and more countries already started to do business with Yuan recently, we'll see what US gonna do about it.

 

[jhungary]

More and more countries already started to do business with Yuan recently, we'll see what US gonna do about it.

The US will do nothing. As I said, trading don't affect currency market much.

In fact, in case of Saudi Arabia. do you even know Saudi Riyal is pegged to the dollar?

The economic benefits of pegging the Saudi riyal to the dollar

The Saudi Arabian Monetary Authority (SAMA) recently re-affirmed its commitment to its exchange rate policy of pegging the Saudi riyal to the US dollar as a strategic choice. It indicated that the peg has supported national economic growth in Saudi Arabia for more than three decades...

www.arabnews.com

Which mean whatever currency they settle with China, it wouldn't change anything, as in 0% because USD and Riyal is at constant value, you don't put anything in that equation. They may as well trade you with US dollar directly...

Again, come to me when people start using Union Pay outside China to settle transaction such as credit cards debt and then I will talk about what US would do. Otherwise they wouldn't do jack shit because it was largely unrelated.