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

[F-22Raptor]

China was a big part of supporting USD dominance. Until the US govt started to become hysterically anti China. China has only recently started to publicly announce a shift away from the USD, literally just in the past month and you’re grasping onto graphs from past data that have no relation to the massive policy shifts happening today in a critical mass of massive countries.

I go by data, not political statements, hopes, and dreams. Central banks hold $6.5T in dollar reserves. They hold $300B in yuan. You realize US markets trade that amount alone everyday?

The yuans importance is minuscule.

 

[beijingwalker]

I go by data, not political statements, hopes, and dreams. Central banks hold $6.5T in dollar reserves. They hold $300B in yuan. You realize US markets trade that amount alone everyday?

The yuans importance is minuscule.

As long as more and more countries agree on trading with China with Yuan, China'll be happy and would settle for it. China doesn't want to replace dollar with yuan in the first place, China just wants to weaken it. In your own chart it shows the dollar is going down.

 

[tower9]

I go by data, not political statements, hopes, and dreams. Central banks hold $6.5T in dollar reserves. They hold $300B in yuan. You realize US markets trade that amount alone everyday?

The yuans importance is minuscule.

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.

 

[F-22Raptor]

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.

https://twitter.com/x/status/1646129867627298820

US inflation has consistently declined for the last year now.

As long as more and more countries agree on trading with China with Yuan, China'll be happy and would settle for it. China doesn't want to replace dollar with yuan in the first place, China just wants to weaken it. In your own chart it shows the dollar is going down.

The dollar could decline another 10% and still be fine.

 

[Viet]

Yes you work in the financial industry that has overseen some of the most calamitous disasters over the past two decades. That’s why you parrot the Wall Street journal.

China has only recently decided to shift away from the USD publicly and what have you seen over the past few weeks? Saudi Arabia, which controls the global supply of oil and has the petrodollar by the balls, following suit. Brazil, one of the worlds top commodities producers also following suit. ASEAN saying the same thing, various African states as well and let’s not forget Russia and Iran which are already on the sanctions list.

So you’re finally getting a critical mass of countries who are shifting away from the dollar, which has never happened before. And you’re thinking this doesn’t portend a major global shift just because you see a few Chinese billionaires buy overseas assets lol you’re not seeing the forest for the trees.

That’s just trades linked to commodities, exports, imports. Ok we can add central bank reserves. It’s just part of the picture. China as export powerhouse certainly dominates global trade volumes thus China can advance using the yuan as currency. However the big picture is, all of that combined is small money. The forex market is the big elephant in the room.

the global trade volumes is about 32 trillion USD per year. In comparison: the forex market with dollar as major currency is 7.5 trillion USD per day. If China wants to compete with the US then the forex market is the next hurdle to take.

 

[Mista]

You have experienced wild inflation with housing costs, food costs, fuel costs 3x it was fifteen years ago and you think nothing has changed?

US govts ability to print money without causing inflation

Inflation is everywhere, just in different forms. You know why China's CPI has been fairly low in the past decade? Because CPI does not include the purchase of residential properties as they are considered to be capital goods.

But that does not mean the average Chinese are not facing the pressure of the rise in actual cost of living. Especially when Chinese girls place importance of owning a house when looking for a potential match.

Increase in housing prices > increase in household debt > increase in banking assets (other side of the balance sheet)

In Singapore, the annual median household income can buy you around 21.95 sqm of housing area (HDB).
In HK, the annual median household income can buy you around 1.94 sqm of housing area.
In Beijing, the annual median household income can buy you around 2.69 sqm of housing area.
In Shenzhen, the annual median household income can buy you around 1.77 sqm of housing area.

People are complaining about housing affordability everywhere in Singapore, and yet in Chinese first-tier cities housing affordability is like 10x worse. It's pretty obvious the Chinese real estate is in a huge bubble. You know it's a huge social issue when affordability is 10x worse than densely populated Singapore, and you can see why their fertility rate is only ~0.8 in the cities.

Yes, the US financial system suffers from problems like federal deficit at 5.5% of GDP and dumb politicians playing a game of bluff with the debt ceiling. But the problems are not insurmountable, if they can bite the bullet and get their shit together. Like cutting spending, raising taxes, raising the retirement age and reforming their crappy inefficient healthcare system.

OTOH is the Chinese financial system more stable or does it inspire more confidence? They are in a catch-22 situation with regards to their colossal real estate bubble. If it pops, the whole banking system will suffer a massive collateral damage and local governments will run out of revenue. Their local government are also facing debt problems, and their aging population is causing increasing strain on their pension/government finances. But if prices remain high, people will remain as mortgage slaves and domestic demand will suffer.

If you are in charge of other countries' central banks or SWFs, what would you invest in if you want to hold your country's reserves in Yuan? Chinese bonds? Chinese stocks? Or Chinese real estate?

 

[tower9]

Inflation is everywhere, just in different forms. You know why China's CPI has been fairly low in the past decade? Because CPI does not include the purchase of residential properties as they are considered to be capital goods.

But that does not mean the Chinese are not facing the pressure of the rise in actual cost of living. Especially when Chinese girls place importance of owning a house when looking for a potential match.

View attachment 925021
View attachment 925022
View attachment 925023

Increase in housing prices > increase in household debt > increase in banking assets (other side of the balance sheet)

View attachment 925034
View attachment 925035

In Singapore, the annual median household income can buy you around 21.95 sqm of housing area (HDB).
In HK, the annual median household income can buy you around 1.94 sqm of housing area.
In Beijing, the annual median household income can buy you around 2.69 sqm of housing area.
In Shenzhen, the annual median household income can buy you around 1.77 sqm of housing area.

People are complaining about housing affordability everywhere in Singapore, and yet in Chinese first-tier cities housing affordability is like 10x worse. It's pretty obvious the Chinese real estate is in a huge bubble.

Yes, the US financial system suffers from problems like federal deficit at 5.5% of GDP and dumb politicians playing a game of bluff with the debt ceiling. But the problems are not insurmountable, if they can get their shit together by cutting spending and raising taxes.

OTOH is the Chinese financial system more stable or inspire more confidence? They are in a catch-22 situation with regards to their colossal real estate bubble. If it pops, the whole banking system will suffer a massive collateral damage and local governments will run out of revenue. But if prices remain high, people will remain as mortgage slaves and domestic demand will suffer.

Inflation is high worldwide precisely because the fed has jacked up its rates three fold over a few months. This has been how the US has exported inflation causing other countries to bear the burden. In addition other causes of inflation are geopolitical, many or most though not all, also caused by the US which has disrupted supply chains worldwide. This, combined with the unprecedented seizure of Russian assets have contributed to a critical mass of countries rushing to find alternatives away from the hegemony of the USD.

It’s also laughable how you think the US govt is actually competent enough to manage budgets or be in any way fiscally responsible. Do you understand that nearly all US infrastructure projects end up taking 3x longer to complete and are multiple times over budget? If they are even built at all. The US govt has not been fiscally responsible for decades. The last time was probably the 90s where there was a semblance of competence in American fiscal policies instead of the outright pillaging by corporate and lobby interests that we have seen in the past two decades.

There are a huge host of factors today which are accelerating shifts away from the dollar and reducing exposure to the dollar and these are not going to be reversed. The USD won’t disappear overnight and will retain nominal dominance for probably the next decade or even two but its dominance will only go down, it won’t go up from here. And that will place massive pressure on the US govt in terms of its ability to fund its budget and sanction other countries. In fact if the Brics countries do succeed in creating a viable alternative, which they will undoubtedly do in the next few years, the US will only sabotage itself if it continues its hyper aggressive foreign policy and the sanctioning of other countries.

 

[beijingwalker]

Inflation is everywhere, just in different forms. You know why China's CPI has been fairly low in the past decade? Because CPI does not include the purchase of residential properties as they are considered to be capital goods.

But that does not mean the Chinese are not facing the pressure of the rise in actual cost of living. Especially when Chinese girls place importance of owning a house when looking for a potential match.

View attachment 925021
View attachment 925022
View attachment 925023

Increase in housing prices > increase in household debt > increase in banking assets (other side of the balance sheet)

View attachment 925034
View attachment 925035

In Singapore, the annual median household income can buy you around 21.95 sqm of housing area (HDB).
In HK, the annual median household income can buy you around 1.94 sqm of housing area.
In Beijing, the annual median household income can buy you around 2.69 sqm of housing area.
In Shenzhen, the annual median household income can buy you around 1.77 sqm of housing area.

People are complaining about housing affordability everywhere in Singapore, and yet in Chinese first-tier cities housing affordability is like 10x worse. It's pretty obvious the Chinese real estate is in a huge bubble.

Yes, the US financial system suffers from problems like federal deficit at 5.5% of GDP and dumb politicians playing a game of bluff with the debt ceiling. But the problems are not insurmountable, if they can get their shit together by cutting spending and raising taxes.

OTOH is the Chinese financial system more stable or inspire more confidence? They are in a catch-22 situation with regards to their colossal real estate bubble. If it pops, the whole banking system will suffer a massive collateral damage and local governments will run out of revenue. But if prices remain high, people will remain as mortgage slaves and domestic demand will suffer.

Here we are talking about cross border trade settlement, not domestic real estate, besides, do you know any Beijing residents who don't own a house? actually house ownership is very high in Beijing and China. Many people in China work for the government and state companies, where houses are given to them for free, and the government also provides 两限房， 经济适用性房， 廉租房。。。for low income families, the price is just a fraction of the market price.


Countries by homeownership rate

 

[MH.Yang]

This sentence is what is wrong with your and your kind thinking.

Just because world order established by USA is unacceptable to China does not mean anyone other than China have to or even want a new world order.

On the other hand, would you be able to establish a new world order based upon China itself is a big question. Not saying that won't happen, but under the current circumstance, it's as likely to happen as I hit the lottery tomorrow.

The issue here is, if you want to take down the US and take down the US established order, you will need to pay the price and play the piper, you can't ride on the back of this world order at the same time wishing it to be done with and you be the boss, it may happen in Chinese Drama but real world does not happen that way. I mean, I have no problem with you people trying to overthrow the current world order lead by the US, but the duality is, you can't ride on the back of said order while you are thinking of demolishing it. you can't have the cake and eat it, which seems to be most Chinese member here wanted.

You have made many mistakes. You are a typical Western way of thinking, not a Chinese way of thinking. The true victory is not a complete defeat of the opponent.

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

It is not in China's interest to completely destroy the US dollar system and the current world order centered around the USA. If the USA is completely destroyed, many hostile forces in the USA will use China as their new enemy.

Do you think the complete destruction of the Soviet Union by the USA is a strategic victory rather than a strategic mistake? If the Soviet Union still exists, China and Europe will continue to unite under the leadership of the USA. China would never make such a foolish strategy.

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

 

[beijingwalker]

You have made many mistakes. We only need to weaken the status of the USA and the dollar, rather than destroy it.

It is not in China's interest to completely destroy the US dollar system and the current world order centered around the USA. If the USA is completely destroyed, many hostile forces in the USA will use China as their new enemy.

Do you think the complete destruction of the Soviet Union by the USA is a strategic victory rather than a strategic mistake? If the Soviet Union still exists, China and Europe will continue to unite under the leadership of the USA. China would never make such a foolish strategy.

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

Yes, China just likes to sell her products and settle the sales with her own currency, nothing wrong with it.

Hong kong's export is almost as big as Japan and ahead of Korea, pretty impressive for a tiny city.

 

[dbc]

It’s also laughable how you think the US govt is actually competent enough to manage budgets or be in any way fiscally responsible. Do you understand that nearly all US infrastructure projects end up taking 3x longer to complete and are multiple times over budget?

this is true of all infrastructure mega projects all over the world including China, according to an Oxford study 90% of all infrastructure are over budget. Further, the average cost overrun on these projects is consistent across the board be it Chinese or Western. Although, once funded Chinese mega projects on average are completed in 4.8 years while these projects average 6.9 years in wealthy democracies. The key difference is the time it takes in Western societies to publicly discuss and debate the merit of the project before a decision to fund is reached.

The HZMB bridge was over budget by a 100% and delayed by five years but the greater issue is the systematic destruction of economic value from projects that are ill conceived and there are more examples of such in China than anywhere else in the West.

I for one would rather we take the time engaging in a societal discussion to argue the merits / demerits before we arrive at a funding decision. You may prefer the Chinese approach but then we already know you are a misfit, i'll suited for western society and democratic values. It's fine, you prefer to trust the government and do as you're told while I don't trust my government and question everything.

 

[Mista]

Inflation is high worldwide precisely because the fed has jacked up its rates three fold over a few months.

Erdogan, is that you?

The USD won’t disappear overnight and will retain nominal dominance for probably the next decade or even two but its dominance will only go down, it won’t go up from here. And that will place massive pressure on the US govt in terms of its ability to fund its budget and sanction other countries.

Tbh, I actually see that as a good thing for the US if it can force fiscal discipline on them. The chickens will have to come home to roost one day.

 

[tower9]

this is true of all infrastructure mega projects all over the world including China, according to an Oxford study 90% of all infrastructure are over budget. Further, the average cost overrun on these projects is consistent across the board be it Chinese or Western. Although, once funded Chinese mega projects on average are completed in 4.8 years while these projects average 6.9 years in wealthy democracies. The key difference is the time it takes in Western societies to publicly discuss and debate the merit of the project before a decision to fund is reached.

The HZMB bridge was over budget by a 100% and delayed by five years but the greater issue is the systematic destruction of economic value from projects that are ill conceived and there are more examples of such in China than anywhere else in the West.

I for one would rather we take the time engaging in a societal discussion to argue the merits / demerits before we arrive at a funding decision. You may prefer the Chinese approach but then we already know you are a misfit, i'll suited for western society and democratic values. It's fine, you prefer to trust the government and do as you're told while I don't trust my government and question everything.

You want to compare China's capabilities in building and managing infrastructure with the half assed, pork barrel projects that we have here that pass for infrastructure projects?

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.

Infrastructure is one thing, that's not even touching the tip of the iceberg compared to how much pillaging there is of government funds by weaponizing government policy by special interest groups. It has always been there but since the Bush administration, the corruption and pillaging has become more outrageous every year and it doesn't even matter who is in the White House, Democrat or Republican.

Erdogan, is that you?



Tbh, I actually see that as a good thing for the US if it can force fiscal discipline on them. The chickens will have to come home to roost one day.

The US won't be able to reform because many of these problems are structural. Until the government rids itself of special interest groups and politicians are actually focused on the social welfare of the American people instead of satisfying the needs of the MIC, overthrowing foreign governments and waging limitless war, this corruption and mismanagement won't ever end. And it will be the American people who will suffer and be left with the bill. The billionaires and their political puppets will have golden parachutes and they will be ok.

 

[F-22Raptor]

https://twitter.com/x/status/1647586137286799366

 

[Mista]

Hong kong's export is almost as big as Japan and ahead of Korea, pretty impressive for a tiny city.

Basically all are re-exports. HK's manufacturing is almost non-existent.

Domestic exports are only $8bil in 2022.