MY knowledge is based on Knowledge and not silly proclamations.
At last count, the yuan had only a 0.3 percent worldwide share of global foreign currency transactions, vs. 85 percent of dollars = China domination forth coming (not). HELL_ The most optimist projections show Yuan at 12% in 2035.
2. The yuan isn’t freely convertible, and few foreign investors have unadulterated access to mainland financial markets= for you a Confidence for investors ( not)
3. China's overwhelmingly state-controlled banking system, means Chinese authorities enormous power over the flow of capital = confidence that politico can change at a whim = a good thing for you/ confidence ( NOT!)
4. China facing more and more internal strife and riots that are concern for investors
5. some of China’s recent successes are illusory. Many merchants, for instance, bought offshore renminbi solely to profit from China’s currency’s appreciation. But in China’s slowing economy, the renminbi actually depreciated this year.
6. Investors are acutely familiar with the under valuing and manipulation of the Yuan artificially!
7. Remember, the world reserve currency country is saddled with a consistent current account deficit. Thus, China must push out trillions of renminbi and renminbi-based asssets into the world economy. Fine if your model is open and based on consumption. Not so good if it is driven primarily by exports, as China’s is. So we will need to see a big shift in China’s growth model. That will be a wrenching long-term process
8. The reserve currency country must open its market to allow foreign investors to hold local assets. This means China will have to make a complete change to its current political structure to allow much more freedoms for citizens (not only allow money to flow in, but allow its citizens money to flow out freely). The system in place is not something that is likely to change anytime soon despite the window dressing.
9. The US is becoming wealthier relative to China. Say what? All true. The fact is since 1991, “the average Chinese citizen is more than $17,000 poorer relative to the average American than he was in 1991.” Per capita income for relatively large states is the best single determinant of competitiveness long term. So, until this trend changes, it is highly unlikely the US will give up the mantle of currency reserve status.
10. Officially, all is good. But unofficially, China may be facing its own debt bomb that could dampen growth for years, not just one or two quarters. It happened to Japan. Never say never! “The government’s official debt is only 15 percent of GDP, but it adds up quickly. Ratings agency Fitch estimates a bailout could cost 20 percent of GDP. Add the unpaid cost of the last bailout, debts at state-owned entities, local governments and pension liabilities, and a Breakingviews calculation suggests Beijing’s debt rises to roughly 130 percent of GDP,” according to Reuters Breakingview
and finally about the US T bonds and it's forthcoming bubble: Someone forgot to tell your leadership about it as early as this year in May...
China buys U.S. T-bonds directly - Xinhua | English.news.cn
State of Denial