China has surpassed the US economy on several key measures: China is the largest trading country in the world, the largest importer of oil, and has the fastest growing economy.
So why should the rest of the planet listen to China?
Well, China now accounts for more global trade [40] than anyone else does, including the United States.
China is also now the number one importer of oil [41] in the world.
At this point, China is even importing more oil [42] from Saudi Arabia than the United States is.
China now has an enormous amount of economic power globally, and the Chinese want the rest of the planet to start using less U.S. dollars and to start using more of their own currency. The following is from a recent article in the Vancouver Sun [43]…
Three years after China allowed the yuan to start trading in Hong Kong’s offshore market, banks and investors around the world are positioning themselves to get involved in what Nomura Holdings Inc. calls the biggest revolution in the $5.3 trillion currency market since the creation of the euro in 1999.
It’s been debated for some time that the USD will lose it’s reserve currency status, this shift has already started to some degree. But it’s relatively agreed upon that the USD has had it’s time and is in a process of unwinding as the world’s reserve currency. Central banks have decreased the use of their USD for reserves in favor of gold and other currencies. What’s not clear however, is what currency could replace the USD? The most common leaders are said to be:
- The Euro
- The Chinese Yuan
- The Russian Ruble
- A new single global currency (SDRs?)
The Euro is not a likely candidate due to the fact that the Euro is already a ‘supracurrency’ and is in jeopardy for it’s own existence, at least in it’s current form. Russia is not a large enough economic player to be the dominant global economic force, but certainly will be a key participant in any new global financial system. Skipping the possibility of a global ‘one world currency’ this leaves only China to be the one to replace the US Dollar.
China is not what many westerners have in their mind, it has changed rapidly over the last 30 years. China is home to suburbia, golf-courses, high speed maglev trains, shiny skyscraper downtowns, resort hotels, and a healthy dynamic business community that trades with nearly every country in the world. Where China is behind is their financial sector, specifically their currency. China has a large self-interest to use their own currency, the Yuan, instead of that of their largest partner, the USD. So they will likely go in that direction not for the purpose of being the new global reserve currency but for their own economic self-interest.
Strangely, in the US China is accused of being a currency manipulator (Technically any central bank backed currency ‘manipulates’ it by creating M3 or changing interest rate). But if China ‘stopped’ manipulating their currency, the Yuan would likely rise drastically thus causing products sold at Wal-Marts to jump by hundreds of percent.
The US economy and standard of living for many Americans of all classes can largely be credited to the US Dollar being the global reserve currency, and China’s use of the USD instead of the Yuan.
Further Reading
http://www.zerohedge.com/print/481228
