- - - - - - - - - - - - -

Friday, December 26, 2008

China moves on multiple fronts

Piracy - an excuse needed for China to demonstrate she can project her military force beyond her region. Now she is projecting her financial and monetary force over a nascent Greater East Asian Co-prosperity Sphere Yuan zone.
Xinhua reporting:

BEIJING, Dec. 25 -- China's currency, Renminbi, is likely to join other international currencies to be used for forex reserves by other economies, according to Wu Xiaoling, former vice governor of the country's central bank and now the deputy head of the financial and economic committee under the top legislature.

Wu made the remarks in her article carried by the latest annual issue of the leading business magazine Caijing.

Wu wrote that China should make preparations in its economic structure and its financial regime for its currency to be internationalized.

Prior to making the Renminbi, also called yuan, a currency used for forex reserves by other economies, it may be allowed to be used for trade settlements between China and some other countries and regions, according to Wu.

In China's neighboring countries, there were calls for the yuan to be used to settle bilateral trade payments, she said. China has signed settlement agreements with eight neighboring countries, including Russia, Mongolia, Vietnam and Myanmar, assuming a voluntarily choice of settlement currency, she added.

Many were confident of the yuan and willing to settle trade payments in the Chinese currency, as it remained strong, Wu said.

"China should create conditions for the yuan to become an international settlement currency," she stressed.

It is necessary to expand and deepen the yuan-denominated financial markets and step up the process to realize the full convertibility of the currency and provide investment channels for yuan holders, according to Wu.

This will further dry up demand for US Dollars and then, once their mates are using their currency they will unfix themselves from the US Dollar completely. And it's bye, bye America.

Most of China's external trade is settled in U.S. dollar or the euro at present. But, the paper said, many analysts predicted the dollar might depreciate substantially in the coming years because of the ailing U.S. economy.

"The move will also increase the yuan's acceptance in Asia, which will help it become an international currency in the long run," Zhao told the paper.

The yuan's acceptance has been rising in recent years, thanks to the nation's economic prowess and its 1.9 trillion reserves of foreign exchange, according to the paper.

And a cyber war has broken out between China and Japan:

The site is still out of action this afternoon. China 1, Japan 0.


At 26/12/08 1:48 pm, Anonymous Anonymous said...

at least they arnt sitting on their hands like everyone else

At 26/12/08 2:51 pm, Anonymous Anonymous said...

Where will NZ new Chinese loyalties lie when push come to shove with China?

At 26/12/08 3:37 pm, Anonymous Anonymous said...

with china of course! what a silly question, thats a question we all know the answer to. but who cares anyway! what the fuck are we gonna hold em off with anyway? our airfor...oh wait a minute, we sold it! our best and only real hope is some gurella campaign that will eventually end.

At 26/12/08 3:57 pm, Blogger Tim Selwyn said...

Will "push come to shove" with China? We've both signed a free trade agreement with one another. If the other partner countries in Asia begin to settle in Yuan...? Where is NZ in that scenario? It will be interesting to see the exchange rate movements now.

China announces these measures in the Christmas holidays to down-play what is a big move. A "reserve currency" is what the State media are reporting from the highest levels. This is a significant move - an inevitable one. There will be little if any trading with all the public holidays so the timing is a planned move I suspect (rather than a panicked reaction to the current financial crisis). The US the way it is it is probably becoming a necessity to de-link themselves from the greenback.

At 27/12/08 12:56 pm, Anonymous Anonymous said...

hmmm, intesting start for chinas new begining as a world power

At 27/12/08 3:46 pm, Anonymous Anonymous said...

This comment has been removed by a blog administrator.

At 27/12/08 4:34 pm, Anonymous Anonymous said...

tim, if i were you id say 'im not even going to dignify that with a response'

At 27/12/08 6:19 pm, Blogger Tim Selwyn said...

It's the silly season. I delete that stuff when it pops up.

A very interesting article from the NY Times today - probably coincidentally - about China. Have posted on this.


Post a Comment

<< Home