Actually - China is not self sufficient in protein - look at the soybean imports. So I push back and suggest that hotpot with meat will become a luxury. Assuming nuclear war doesn't you know, prevent you from growing food in the fertile land of the Yangtze/Pearl river deltas.
Renminbi (RMB)/Yuan Appreciation & Internationalization
- Thread starter supercat
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Actually - China is not self sufficient in protein - look at the soybean imports. So I push back and suggest that hotpot with meat will become a luxury. Assuming nuclear war doesn't you know, prevent you from growing food in the fertile land of the Yangtze/Pearl river deltas.
Nuclear war is overrated. Life return to Hiroshima and Nagasaki fairly quickly.
Life can go on with reduced protein consumption.
China has 1 year supply of grain and with reduce population as a result of nuclear attacks, that can last a bit longer. Chinese researchers are coming up with rice and wheat strains that can grow on alkali soil. That opens up lots more land that can grow grain.
Your specific query was a timespan of 5-10 years. In the next 10 years, I believe the odds of a US-China war over Taiwan are 10-20%.
So whilst this is probably not going to happen, we can see Central Banks and Investment banks today preparing to bypass or abandon the US Dollar.
And this development does have immediate practical implications for technology development with CBDCs and also company/macro strategy.
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I think it's obvious that no-one in the world welcomes such a war, except some US neocons who believe the US would win such a war at little cost to the US.
So I am pointing out that one of the costs of any US-China war, is the likely death of the US Dollar as the global reserve currency.
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Now, assuming we successfully navigate the next 10 years without a war, then it's the imperial decline scenarios that Dalio previously outlined.
It would be difficult to predict the specific events that would presage the decline of the US Dollar, but the background I imagine would be as follows:
In the 2035-2040 timeframe, I expect China to have an economy twice the size of the USA, given modest growth rates and modest currency appreciation towards PPP levels. You can run your own models.
If you combine that with likely R&D spending levels, China will almost certainly a technology leader and be independent of any sanctions from the US in terms of semiconductors and aerospace.
China is already the world's largest trading nation. And today, it is also the world's largest creditor nation by far.
In 15 years, this will be even more pronounced
I expect China to contribute somewhere between 30-40% of total global growth . Again you can run your own models.
Today's situation where the World Bank expects China to grow more than the rest of the world combined will only occur during Western recessions which regularly occur every 7 years or so.
From a military perspective, we're looking at absolute military superiority in the Western Pacific, irrespective of whatever the US military can do. However, China will be lagging behind on distant power projection abilities because aircraft carriers take so long to build.
But back to the events that might trigger a collapse in confidence in the Dollar. Maybe there is a conflict of some sort. Maybe there is a financial crisis in the US, and China bails out the US as part of a bigger deal. Maybe China opens up the RMB and commodity-producers such as Russia and the Middle East switch to the RMB, thereby forcing everyone else to switch and start the stampede out of the USD.
As I say, it's difficult to predict specific events.
It won't be a gradual degradation of the US Dollar. It will be a sharp and sudden loss of confidence, so no-one wants to be left standing with all those devalued dollars.
In the event of nuclear war, China is a continental sized nation that is broadly self-sufficient in staple foods and everything else.
People can get by without eating meat, as was the norm for every human being just 200 years ago.
In comparison, Japan is a small and densely populated island with no natural resources and relies on seaborne imports for two-thirds of its food.
If you believe that a US-China war will result in a nuclear exchange, then why on earth is the Japanese government committing seppuku? In the event that the China-Taiwan civil war restarts, the Japanese government is saying they will join the US in a war with China.
The smart move from Japan is to be neutral.
Is this accurate?
Most likely Russia will blow Japan up for the world.
The best target countries China should try to start RMB trade with，are those countries who have a trade surplus against China，like Saudi Malaysia Brazil Chile etc.
Because those countries which have a trade deficit against China，would have to borrow RMB from China then use it to purchase goods from China. Not very convenient，and it's the key reason why the RMB trade deal between China and Bangladesh failed，because of the huge discrepancy in bilateral trade
On the other hand，for those countries who have trade surplus against China，China could just purchase goods from them and pay them RMB，it would be much more easier to implement.
Because those countries which have a trade deficit against China，would have to borrow RMB from China then use it to purchase goods from China. Not very convenient，and it's the key reason why the RMB trade deal between China and Bangladesh failed，because of the huge discrepancy in bilateral trade
On the other hand，for those countries who have trade surplus against China，China could just purchase goods from them and pay them RMB，it would be much more easier to implement.
That doesn't make sense because what do those surplus countries do with excess RMB? They need to lend it out to people who need RMB, aka countries who have a trade deficit with China. This means China needs to start with everyone on RMB trade, not just the ones with trade surplus.
What can these countries do with excess RMB？Simple，exactly the same way countries do with excess dollars. Buy Chinese Treasury bond，and invest in China.