On Monday November 30, the Chinese currency – the yuan – will join the dollar, euro, pound and yen as the world’s official reserve currencies, as recommended by the International Monetary Fund (IMF). Are we reaching the fabled new era of multipolarity, and will it bring stability to a chaotic world economy – “a win-win result for China and the world,” as the People’s Bank of China claims? Or instead, will this heraldthe amplification of extreme uneven development, worsening financial crises, and the abuse of Chinese economic surpluses, yet again, for the purpose of bailing out the corrupt, fragile world financial institutions and their elites?Out of paradigm but interesting as a view from the left that is not too different from that on the right. Nothing that being in paradigm would not fix.
Global Research
China Sucked Deeper Into World Financial Vortex, as BRICS Sink Fast
Patrick Bond | Professor of Political Economy at the Wits School of Governance and director of the University of KwaZulu-Natal Centre for Civil Society. His PhD was at Johns Hopkins (1993) under the supervision of David Harvey.
4 comments:
Since there is little use for Yuan in the world outside China, when China provides development Yuan to countries around the world or other central banks hold Yuan for any reason, I think it will make it easier for recipients to convert the Yuan to useful currencies to buy real goods without pressuring the Chinese-currency management regime.
Selling Yuan or getting money out of China when the government says to buy or when Govt is actively enforcing capital controls is considered "malicious short selling." They want the benefits of the world using and accepting Yuan but they don't want to have the risk that markets set prices. So this is a temporary work around until their industries have become ready to compete on a level playing field, imo.
All the hubris and big ideas and rapid progress that China has made is impressive, it is easy to forget that they haven't progressed through technology but through brute-force-labor and by keeping their currency/incomes lower than would have otherwise been the case -- they have to take the dismantling of capital controls very slowly and carefully to prevent massive disruption in industry -- though fast enough to keep pressure on the companies to reform. They have a huge amount of investment and work to do to bring their productivity close to western standards.
For me, this article helps illustrate the enormity of the challenge. It compares the operations of Amazon to Alibaba. Stunning.
Where Iron ore, Coal and cement were the super-cycle of China during the last 25 years, the next 20 years, will be industrial engineering and automation companies. Coal and iron will go to India, Pakistan and Africa instead.
For me, this article helps illustrate the enormity of the challenge. It compares the operations of Amazon to Alibaba. Stunning.
The clue to the probable outcome is that while Jeff Bezos has to control everything, Jack Ma doesn't.
(Return on coordination)
Fedex, USPS and UPS have done most of the heavy lifting to make amazon possible. By volume, mostly USPS.
That comparison is between apples and oranges.
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