The Chinese Swap

[PROUT Globe, January 2015] – The shift from a US-dominated world economy to a Chinese-dominated one will lead to a transfer of global power to previously industrialised underdeveloped countries.

In Africa, Chinese “swap” dynamics are now stimulating a number of economies, where Zimbabwe and Ghana are already using the yuan as part of their reserve currency.

China has also begun supporting the Argentinian peso and the Russian rouble in ways that strengthens the three currencies involved as well as increasing the export of Chines goods to those countries.

Since 2005, China has replaced USA as the number one trading partner of nearly all major countries (among them Japan, South Korea, India, Russia, Brazil, Australia, EU countries, Latin American countries). Soon all these countries too will be using yuan in trade.

For instance, when an Indian will send money to say Uganda, it would go in Yuan and not in dollar, which is the mode of trade right now. By then the US dollar hegemony, if not the currency itself, will be history, notes Dr. Susmit Kumar.

In 2009, only 1% of Chinese trade was conducted in Yuan. In 2014, it was 15% and by 2016 nearly one-third of Chinese trade will be in Yuan.

References

Dr. Susmit Kumar: http://susmitkumar.net/index.php/us-economy?id=130:stop-blaming-china-it-is-the-structural-failure-of-the-global-trade-system

Wolf Street: http://wolfstreet.com/2014/12/24/global-monetary-power-shifts-from-dollar-china-stakes-claim-rescues-currencies-of-argentina-and-russia/

The Africa Report: http://www.theafricareport.com/North-Africa/chinese-yuan-and-us-dollar-compete-in-african-markets.html

WIkipedia: Internationalization of the renminbi (yuan)

Leave a Reply

Your email address will not be published.