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- Thread starter bd popeye
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I think you're mistaking China's slow and methodical approach to achieving a goal with China not being interested in the goal.
You can't internationalize the RMB before you establish global demand for it, RMB settlement of global energy is a major part of allowing China to do so without losing control.
Exactly my thoughts-Battle of Carrhae-Rome's richest man Crassus wants to expand eastward into Parthia-with whom they had a treaty-7 legions destroyed by General Surena,who brilliantly foght his battle not Rome's and of course the Teutoburg Forest battle which stopped destroyed at least 5 legions prevented Rome's northward expansion
FriedRiceNSpice
Major
How do you propose other nations to acquire more RMB without either reversing their trade deficit with China or exchanging depreciating dollars for RMB? One thing Chinese economists and current US economists agree on is that the absolute last thing you want is for your currency to become a global reserves currency. China wants an alternative to the dollar as the global currency of trade- but it absolutely does not want the RMB to be the replacement.
For this reason, it is better to have the BRICS currency take this role
FriedRiceNSpice
Major
Yes, so China should prioritize facilitating the replacement of the letter I.
They can swap some of their national currencies for yuan through bilateral central bank agreements.
That would then push them even more naturally toward de-dollarizing trade and finance with China.
I think both of you are right in a sense.
China does not want complete global RMB supremacy if that means repeating the same self-destructive path the US took.
But it still wants some clear superiority, mainly as I doubt Iran would make a move like this unilaterally.
Iran can be the 'I', well deserved if they survive
letter I already has a replacement which is Iran, all that needs to be done is to kick India out which is the hard part because as far as i know there needs to be a multilateral consensus between all members that India needs to go.
Also imo the UAE is also bad influence, tell them to either stop with all the funding proxy war's on behalf of Israel bullshit or GTFO.
Currency swap with China on an individual country basis, slowly ramping up in volume over time. Then China takes the dollars and recycles them into some kind of commodity to accumulate like gold or takes the counter-party currency and buys a ton of minerals or ag products from that country. The purpose isn't primarily to accumulate commodities and resources with this plan, but to slowly transition the world to RMB settlement, one piece after another. China has been doing this slowly and methodically over the last decade.
Now as for whether or not be the global reserve currency is objectively bad is hard to rule on. I think we can all see that the US has projected a lot of power based on this position of privilege, despite whatever long-term deindustrialising effects of having high purchasing power and low exporting incentive from their currency position. The ability to sanction a country into oblivion and bend them to your own geopolitical desire can not be understated. China's current problem is low consumption. The clear argument to be made that having a high cross-border purchasing power currency increases incentive to consume, but then the issue is that it would only incentive imports at the cost of domestic production. I think it's a lot more complicated than just being holistically bad or not bad.
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