Military Review

Washington vs Beijing: containment of yuan

19
In relations between the United States and China, there is an increase in tension in all directions. Here are some pain points related to the monetary and financial sphere: the question of the status of the yuan as a reserve currency; RMB convertibility; undervalued yuan rate in relation to the US dollar; low role of China, not corresponding to its position in the world economy, in the IMF; restrictions on the admission of US capital to the PRC banking sector; deter Chinese investment in the US economy.


In this article we are talking about this aspect of the US-China monetary and financial contradictions, as the possibility of the yuan to become a reserve currency. According to the accepted definition, the reserve currency is the one that is part of the international reserves of states. Most often these are reserves of central banks, but there may also be reserves of treasuries. Below are data on the currency structure of international reserves of all countries of the world (table 1).

Table. 1.


Currency reserves of countries in the world by type of currency (as of December 31 2014 of the year)

 

Billion Doll

%

Total

11.600,6

100

Distributed by currency

6.085,0

52,5

U.S. dollar

3.286,3

28,3

Euro

1.351,7

11,6

Yen

241,2

2,1

British Pound Sterling

231,3

2,0

Canadian Dollar

116,2

1,0

Australian Dollar

110,0

0,9

Frank Switzerland

17,2

0,1

Other Distributed Currencies

191,2

1,6

Unallocated currencies

5.515,5

47,5



Source: International Monetary Fund

Many countries do not disclose or disclose the incomplete composition of their international reserves. Nearly half of the total foreign exchange reserves represent an “unallocated balance”. In that part of foreign exchange reserves, which contains information on types of currencies, there is no yuan at all. In addition to the US dollar and the euro, there are the Japanese yen, the British pound sterling, the Canadian and Australian dollars, the Swiss franc. And there is no Chinese currency.



Meanwhile, in 2014, the Chinese economy became the largest in the world, ahead of the US economy. This is the official assessment of the International Monetary Fund. China has bypassed the United States in terms of GDP, converted into dollars at purchasing power parity (PPP). In 2014, China’s GDP in PPP is 17,6 trillion. dollars, and the US GDP for the first time was less - 17,4 trillion. dollars. According to the latest IMF data, China has increased its share in global GDP to 16,48% versus 16,28% in the United States. This trend is irreversible: according to the IMF, next year the gap in GDP at PPP of the two leaders of the world economy will be more than 900 billion dollars in favor of China, and by 2019, Chinese GDP at PPP will be ahead of the US by almost 5 trillion. Doll.

The list of currencies reflected in the IMF statistics includes the monetary units of countries whose gross domestic product is incommensurably small compared with China’s GDP (Table 2).

Table. 2.


GDP of China and some countries in 2013 year (based on PPP)

Country

Billion Doll.

China

16.149

USA

16.768

Japan

4.668

United Kingdom

2.320

Canada

1.518

Australia

1.053

Switzerland

432



Source: International Monetary Fund

There is an extreme asymmetry between the GDP of individual countries and the distribution of international reserves by types of currencies. This asymmetry is a clear manifestation of the unjust global financial order that the West, led by the United States, has formed over the decades after World War II. Those countries that seek the status of reserve currencies for their monetary units receive undeniable advantages. The country issuing the reserve currency is able to cover the balance of payments deficit with national currency. United States since the beginning of the 1970's. cover the deficit of its trade balance with green paper. Reserve status of the currency helps to strengthen the position of national corporations in the competitive struggle in the world market.

Washington vs Beijing: containment of yuan


Western countries parasitize on others due to the special status of their currencies. This parasitism is especially noticeable against the background of the paradoxical discrepancy between the status of the Chinese currency and the positions of the PRC in the world economy and trade. In part, this discrepancy is mitigated by the fact that a number of countries around the world accumulate Chinese currency in their reserves, but do not advertise it. The IMF member countries camouflage this practice, using the right not to fully disclose the currency structure of their international reserves. Judging from the fragmentary information, at least three dozen countries have the yuan in their reserves.

The accumulation of yuan in reserves continues. This is facilitated by such steps on the part of China and their partners, such as concluding bilateral agreements on currency swaps (2015 of such agreements operated at the beginning of 27), organizing yuan trade on a number of world currency exchanges, creating offshore clearing centers (for operations with the yuan) in Singapore , London, Paris, Frankfurt, Luxembourg, Seoul and Hong Kong. In addition, a number of Western countries, including the United Kingdom, have issued bonds denominated in Chinese currency. That is, the demand for the yuan is growing all over the world. And Washington can't do anything about it.

In addition to the de facto reserve currency, there is also the concept of a de jure reserve currency. This status is assigned to the monetary unit by the decision of the International Monetary Fund. The IMF establishes a narrow range of monetary units that are included in the so-called basket of reserve currencies. And she, in turn, is necessary in order to set the rate of supranational monetary unit SDR - Special Drawing Rights SDR (Special Drawing Rights - SDR).

SDR emission began in the 1969 year, when the Bretton Woods system actually ceased to function. Initially, the basket included five currencies. With the advent of the euro, the German mark and the French franc dropped out of the basket. To date, the basket includes four currencies: US dollar, euro, yen and pound sterling. The exchange rate is calculated on the basis of the weighted average value of the indicated currencies. The entry of a currency into the basket significantly raises its credibility. Talk about the fact that the yuan should become the fifth currency of the basket has been going on for a long time, but Washington is opposed to this in every way, realizing that replenishment of the basket by the yuan will be another significant blow to the dollar.

Every five years, the IMF conducts a review of a basket of reserve currencies. A regular review should take place at the end of 2015. Experts believe that the Chinese currency meets all the requirements of the reserve currency. In March, IMF Managing Director Christina Lagarde, in an interview with Western media, noted that the decision to include the yuan in the basket was overdue and was only a matter of time. Probably in this case, Lagarde reflected the interests of European countries. China’s trade with Europe is very large, the European countries need a yuan in reserves. However, this requires a formal decision by the IMF, since the spontaneous accumulation of Chinese currency by Europeans would be the cause of constant shouts from Washington.

Washington is trying to act ahead. Already, he is putting pressure on his allies, suggesting to them that the yuan cannot be included in the basket of reserve currencies. In early April, this was announced by US Treasury Secretary Jacob Lew. The minister did not particularly go into the details of the question, but simply gave a portion of the next “recommendations” to Beijing. They say that in order to meet international requirements, China will have to carry out deeper reforms in the monetary sphere, including loosening control over the movement of capital and move to a floating exchange rate of the yuan. These are commonplace platitudes in the spirit of economic liberalism, which Washington habitually addresses to all countries outside the “golden billion” zone. For a long time, these banalities were relayed by the IMF, but today it is experiencing a crisis and can no longer treat Beijing as categorically.

According to some reports, a number of countries (in particular, Germany and Australia) in December 2015, during the review of the basket of currencies can support China. This is supported by the fact that many Western countries, despite pressure from Washington, in March of this year applied for participation in the capital of the Asian Infrastructure Investment Bank (ABII), created under the auspices of China.

Of course, Washington, in deciding whether to give the yuan the status of a currency that is part of the reserve currency basket, can vote against. For the time being, the United States retains a blocking package (around 17%), but the overall installation in the IMF should be taken into account. Since the end of 2010, Washington has been blocking the reform of the fund, which should bring the quotas of countries, and especially China, into line with reality. Washington's vote against the yuan could finally put an end to the International Monetary Fund. And this will lead to a radical restructuring of the global financial order, and not in favor of Washington and the US dollar.
Author:
Originator:
http://www.fondsk.ru/news/2015/04/15/vashington-protiv-pekina-sderzhivanie-uana-32794.html
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  1. DVxa
    DVxa April 16 2015 19: 06 New
    +8
    Tortured by this dollar already .. negative
    And they drove the people into the head, the dollar-dollar is an immortal currency.
    That ruble falls and other currency that we can not turn on the machine in time due to the total ties to the dollar ..
    1. Lt. Air Force stock
      Lt. Air Force stock April 16 2015 19: 17 New
      +2
      Quote: DVxa
      Tortured by this dollar already ..
      And they drove the people into the head, the dollar-dollar is an immortal currency.
      That ruble falls and other currency that we can not turn on the machine in time due to the total ties to the dollar ..

      By the way, they say that those 150 tons of diplomatic mail that the United States transported to Kyrgyzstan are nothing more than cash dollars wrapped in polyethylene on wooden pallets.
      1. Kostyar
        Kostyar April 16 2015 20: 15 New
        +4
        I wonder what around the world with the accumulated dollar will be done after the collapse thereof ...?! To the rolls, and to the toilet on the wall near the pot, where he has the right place !!!
    2. hrych
      hrych April 16 2015 21: 33 New
      +7
      Duplicate:
      Let's just say the dollar is a global currency according to its binding to a barrel of oil (even there is the concept of petrodollar), thanks to the collusion of Britons and Saudis. Fed slapping dollars, not owned by the US state, but by the British-Dutch box. And why did the pound remain in Britain for internal settlements and why is oil not tied to it, although prices determine the start of trading on the London Oil Exchange? Let's try to explain.
      We take the concept of the Taller monetary unit on Wiki and observe the following:
      Taller is the name of a large silver coin, which in the XNUMXth – XNUMXth centuries played an important role in the monetary circulation of Europe and in international trade.
      We quote further:
      Very soon thaler occupied a dominant position in international trade.
      In Spain, thaler became known as thaler, in the southern Netherlands - dalder, in the United Provinces and Lower German lands - daalder, in the Scandinavian countries - daler, in Italy - tallero.
      In England, thaler was called daller, then dalar and, finally, dollar.

      Then the dog is buried, dollar he is a taller - originally a world currency, and not America imposed on everyone. So it turns out that the United States offshore from a bunch of states with its laws and regulations, without its own currency (only with the global one), without government, because preziki were either little actresses or drunks and ended with a talking primacy (personalities like Kennedy who claimed real power were disposed of). Earlier, taller-dollar was the equivalent of silver, now the equivalent of the most valuable and widespread in world trade is oil enemas.
      Here.
    3. Talgat
      Talgat April 16 2015 22: 24 New
      +1
      Quote: DVxa
      Tortured by this dollar already ..
      And they drove the people into the head, the dollar-dollar is an immortal currency.
      That ruble falls and other currency that we can not turn on the machine in time due to the total ties to the dollar ..



      It's not all that simple. We destroyed the USSR - our home - and as if everyone were left "without electricity, gas and water" - I give an accessible analogy of the financial system

      Then the "guys" from the FRS come and say - why die without communication? We will connect you now - we had to agree - but we still pay

      What BRICS is doing now is starting to change some of the pipes for their own so as not to depend. Then you need to introduce your own currency into the EAEU - but not the current "dollar-dependent" tenge and rubles - but a really free currency altyn
  2. ratfly
    ratfly April 16 2015 19: 06 New
    11
    We do not care how Matrasia falls, through the economy or vice versa it will die. The main thing is destroyed Washington!
    1. sichevik
      sichevik April 16 2015 19: 49 New
      +4
      I absolutely agree with you. The critical mass of atrocities committed by this gangster country is growing every minute. Soon it will exceed all permissible norms. And then it will explode. I would rather.
    2. The comment was deleted.
    3. Roman 11
      Roman 11 April 16 2015 20: 30 New
      +1
      Quote: ratfly
      The main thing is destroyed Washington!

      Have you ever thought that the USA is the same occupied country as Japan, or Germany ?? ........ only which is much worse than the others - a lie utterly presses on morality, the status of exclusivity, also a burden on the neck. And these sadistic, savage police officers who kill many unarmed black people who are not resisting in front of many people ?? They simply took refuge in the reserves and bred financially, the clan oligarchic plankton ....... If this infection weren’t, it would be more dangerous for New Russia to live there.
  3. sent-onere
    sent-onere April 16 2015 19: 09 New
    15
    The USA is now like a runner who stumbled and now, in order not to fall, is trying to accelerate faster and faster, but physics and mechanics cannot be fooled, the faster they accelerate, the more they will fall face down on the asphalt! I wish them a speedy epiphany with this method (face on the asphalt) and the more they attach themselves to it, the better! As the Russian proverb says: "Take the load by yourself, so as not to fall when walking!"
  4. deputy ___ watered
    deputy ___ watered April 16 2015 19: 40 New
    0
    It is possible that the green papers with the presidents and other methodological recommendations for the establishment of "democracy" in a particular country arrived in Bishkek so timely.
  5. UralMan
    UralMan April 16 2015 19: 52 New
    +1
    hands itch-DOLLAR Muzzle PUNCH
    1. bulvas
      bulvas April 16 2015 20: 05 New
      0
      Quote: UralChel
      hands itch-DOLLAR Muzzle PUNCH


      which bill?
    2. Roman 11
      Roman 11 April 16 2015 20: 15 New
      +2
      Quote: UralChel
      hands itch-DOLLAR Muzzle PUNCH

      It's too early, because we still buy their bonds laughing What can I say - the colony ........
      1. Roman 11
        Roman 11 April 16 2015 20: 43 New
        +1
        Quote: Novel 11
        What can I say - the colony ........

        And what is this minus set me ?? Am I buying bonds ?? laughing
      2. hrych
        hrych April 16 2015 20: 54 New
        +2
        No longer, the current revived power of our armed forces and at the very least neglected development of the country's economy, which withstood the sanctions and oil dumping, we owe to the competent actions of the GDP, which played with this greenery, with the French cheaters and who missed the moment when the disarmed colony turned into a superpower ... Everything else is nonsense. When there is "Northwind", then we are not afraid of ... Ray (synonym for a banker).
  6. maxim947
    maxim947 April 16 2015 20: 11 New
    +1
    Quote: ratfly
    We do not care how Matrasia falls, through the economy or vice versa it will die. The main thing is destroyed Washington!

    Nothing to add directly))))
  7. Don Cesar
    Don Cesar April 16 2015 20: 30 New
    0
    to make the dolar die soon, along with your smoked obama
  8. Walk
    Walk April 16 2015 20: 41 New
    +1
    The process of dedollarization is already moving. China and Russia are already converting their gold reserves from US securities to gold. In addition, Russia also pays for international obligations, if possible, also with these securities.
  9. Tribuns
    Tribuns April 16 2015 21: 15 New
    0
    "Washington's vote against the yuan could finally put an end to the International Monetary Fund" ...
    Well, this is unlikely ... the US and the EU are negotiating the creation of a free trade zone between them as opposed to China ... Yes, and European countries - NATO members will not go across their defender and senior partner in the US bloc ...
    Only independent efforts by China to create an alternative to the IMF in the form of the Asian Infrastructure Bank, to which Russia also joined, as well as the creation of a bank under the BRIGS able to change the US position in the IMF ...
  10. twincam
    twincam April 17 2015 01: 28 New
    0
    Karoch will turn Omeriko into the wild West.
  11. Starik72
    Starik72 April 17 2015 02: 26 New
    +2
    Oh, how I want the dollar to die and soon, and with it these enemies of mankind are financially powerful and the United States. If I live to see this holiday, I’ll drink three glasses of vodka, although I can’t drink it in large quantities.