http://www.bbc.co.uk/news/business-22276222
China has been testing the financial markets in which they are allowing the yuan to be traded more than it has ever before and allow it to be a more globalized currency like the US dollar. This article talks specifics of how this is being done now with Australia which is one of the more recent countries allowed including Brazil and the UK. These attempts to globalized the Yuan are done in hopes for it to be thought of as an alternative global currency to the US dollar Hopefully this will allow the Chinese economy to flourish, but you never know.
Politically, I'm not too fond of China but there appears to be a unavoidable future that China is going to the number 1 economy soon. Globalizing the Yuan is just one of the many carefully calculated moves that the Chinese government has.
ReplyDeleteAs an American citizen this scares me a little. With the amount of debt we have accrued over the past ten years and the value of the dollar decreasing, the thought of a rise in a new foreign global currency is alarming. China has the capital and manpower of being a dominant economy on a global scale and if the Yuan finds success in foreign markets I believe that the United States will see themselves falling to the wayside as a global power.
ReplyDeleteI agree with Matthew's take on this article. I too am alarmed by what the article contained. If China is able to become powerful on a global scale as hoped then I could see the United States taking a backseat to China while we still recover from our recent recession. If we aren't able to figure things out in Washington then this could be a very big possibility and we could see a surge on the globalization of the Yuan.
ReplyDeleteThis is more of a question to the audience but isn't it a world recession rather than just a US recession? I agree that if China's plan is successful that wouldn't be the best thing for us but I believe their economy is suffering in a similar way to ours, perhaps on a less severe scale. It will be interesting to see how it plays out. I believe in order for the US to reach its output potential we have to be more patriotic and do things for the betterment of our country rather than following the typical rules of capitalism, hurting others for the better of themselves.
ReplyDeleteOn behalf of Australia, this seems to be a move to sure up regional relations. As tensions continue to rise in Southeast Asia, this move by Australia has further linked their economy with China. Since the end of the Bretton Woods economic system, the US dollar became a fiat currency and a reserve currency. If the Yuan does become a reserve currency, this will further globalize the world economy and provide an alternative and reduce US influence. I don't believe the US will take a back seat to China, but we will experience a shift away from being the sole dominant power in Asia.
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