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What has never been clear to me is why, after buddying up to the Middle Eastern oil suppliers, colonizing most of Africa, and buying into the South American marketplace--all three providing a source for immense new resources--and after supplanting almost the entire manufacturing industries of North America and Europe, China would worry about the Euro or the Yen, given that the the Renminbi was for all practical purposes THE reserve currency anyway...

The hints were there, of course:

"Oil companies in China -- the second-biggest buyer of Iranian crude after Japan -- have stepped up investment. China National Petroleum Corp., the flagship state-owned oil company, has signed billion-dollar contracts to develop oil and natural-gas fields, replacing other foreign companies that have backed out. China's biggest oil refiner, state-owned Sinopec Group, has also signed on to develop Iranian oil fields."
http://online.wsj.com/article/SB125408502540944481.html?mod=WSJ_hpp_MIDDLTopStories

"Over the past 50 odd years, China has offered aid to 53 African countries with about 800 projects, constructing over 2,000-kilometer of railroad, 3,000-kilometer of highway, sending medical teams that amounted to 15,000 person times, treating some 240 million patients."
http://www.southerntimesafrica.com/inside.aspx?sectid=10626&cat=10

"You probably recall that the nation put money into Brazil's Petrobras (NYSE: PBR) not long ago. The money -- $10 billion -- will allow the Brazilian state oil company to continue chugging along toward the $175 billion it plans to spend on exploration and production during the next five years. In exchange, China will be guaranteed 200,000 barrels of Brazilian crude daily for the next decade."
http://www.fool.com/investing/international/2009/07/06/china-goes-shopping-in-south-america.aspx

And it was even predicted that the Chinese system would ultimately overwhelm the others...

"It's clear to see that the Chinese yuan will be the world's reserve currency in the future."
http://blogs.wsj.com/deals/2009/03/26/the-chinese-yuan-the-next-world-currency/

by asdf on Mon Sep 28th, 2009 at 10:22:27 AM EST
The US became the world's largest economy sometime around the turn of the century. However, the US$ only became the single de facto reserve currency after WWII.

Being the reserve currency is not an unmixed blessing. As long as China maintains its current neo-mercantalist international economic policy regime, it requires some other current to be the reserve currency, so that it has a currency against which to peg.

The US being shifted from the "primarily export growth market" column to the "primarily raw material supply" column in Chinese economic policy would not in and of itself signal the end of neo-mercantalism, so the de facto global reserve currency would not yet be the yuan by 2020.


I've been accused of being a Marxist, yet while Harpo's my favourite, it's Groucho I'm always quoting. Odd, that.

by BruceMcF (agila61 at netscape dot net) on Mon Sep 28th, 2009 at 10:30:02 AM EST
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