China’s New Crypto-Currency: First Step To Full Dedollarization

China’s New Crypto-Currency: First Step To Full Dedollarization

By Peter Koenig
Dissident Voice
May 21, 2020

"We’ll cut off the whole relationship" Donald Trump threatened
China in a recent Fox-Business interview, suggesting he may cut
diplomatic relations with China and thereby saving the US $500
billion dollars.

He didn’t say how, though.

Mr. Trump’s anger referred to what he calls China’s
“mismanagement” of the corona crisis.

This is consistent with the new China bashing hard
line being pushed by his administration.

“I’m very disappointed in China,” Trump said during the same Fox
interview. “We asked to go over and they said no,” he continued,
referring to the Centers for Disease Control and Prevention’s (CDC)
February offer of assistance to the virus-stricken city of Wuhan.

“They didn’t want our help. And I figured that was OK because
they must know what they are doing. So, it was either stupidity,
incompetence or deliberate.”

These are strong and unsubstantiated words since there has
never been a clearly documented accusation against China in
how precisely China mismanaged the COVID-19 outbreak and
is supposedly responsible for the COVID crisis in the US where
real mismanagement, corruption, conflict of interest, and
particularly pharma-interests, competing private vaccine
company interests are written all over the walls, the walls
of shame, falsifying corona statistics, by falsifying death
certificates, paying hospitals for declaring any patient a
COVID-patient, even if many of them aren’t, and for using
ventilators, though it is widely known that ventilators are
causing death in 60% to 80% of patients.

It is almost certain that the virus was created in a US bio-weapons
lab from where it escaped deliberately or by accident and that
patient zero was in the US and that the virus was brought to China
in one way or another.

President Trump knows it.

He also knows about the real mismanagement of the crisis in his
country, the United States.

But he has always been good at self-promoting propaganda and
slandering perceived enemies, as long as he thinks it may help
him being re-elected.

It is obvious that the US China bashing has nothing to do with
China’s “mismanagement” of the corona epidemic, but rather with
China’s bold move a step further away from the dollar-economy,
by:

First, using the yuan and local currencies boosting trade among the
ASEAN+3 countries (Association of Southeast Asian Nations – Brunei,
Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines,
Singapore, Thailand, and Vietnam; plus 3 = Japan, South Korea and
China).

Monetary transactions will use the CIPS (Cross-Border Interbank
Payment System), avoiding the dollar controlled SWIFT payment
scheme.

This is mostly to prevent US interference in international monetary
transactions and also in response to the United States’ threat of
cutting off Chinese supply chains.

The cutting off supply chains is, of course, sheer bluff, as literally
80 percent-plus of US industries depend in one way or another on
supplies from China.

This dependence is particularly significant in medical supplies,
where the US depends for 80% to 90% on China.

But China is China, and President Xi acted fast calling the bluff
and the US may suddenly stand there with an empty cup, since
such supply chains are not replaced overnight.

In the first quarter 2020, ASEAN countries have become China’s
largest trading partner with 15.1 %, outpacing the European Union
(EU). Trade with South Korea and Japan amounted to another
13.7%, bringing the total close to 30%. Adding China’s trade with
Russia, another at least 15%, is getting close to a 50% tipping point
of China’s closest partners abandoning commercial transactions
in US-dollars.

Second, by launching a new People’s Bank of China (PBC = China’s
Central Bank) controlled crypto-currency for international trade,
thereby further circumventing the US-dollar and SWIFT controlled
international money transfer system which makes all transactions
vulnerable to US interference and sanctions.

China’s new cyber-money, e-RMB (Ren Min Bi, meaning People’s
Money), or Yuan, is currently being tested in several Chinese cities,
including Shenzhen, Suzhou, Chengdu, and Xiong’an.

In these cities it has almost universal acceptance; i.e., for salary
payments, public transportation, food and most retail shopping.

The use of digital money is nothing new in China.

Today about 90% of all monetary transactions are electronic for
example, through WeChat and AliPay, but they do not replace
the existing cash currency.

Commodity pricing today, mostly dollarized, will be priced by
China in yuan and traded in crypto-yuan.

Yuan pricing for commodities, such as gold, crude oil and iron ore,
has already started.

As China is recovering from the pandemic more quickly than the
rest of the world, relatively high-returning yuan-denominated
investments and commodity assets will become more attractive.

The non-interference factor of a Chinese Central Bank backed
crypto-currency is an additional security element that will further
boost the Chinese Yuan as a reserve currency.

Already now countries around the globe are sick and tired of US
meddling in their international transactions and especially with
US sanctions – that may come at a whim – every time a country
demonstrates her sovereignty or disobedience to US dictates.

This leads many countries that may not speak out publicly for fear
of sanctions to gradually and quietly divesting their dollar holdings
into Chinese yuan.

A tipping point may be reached when about 50% of world trade
and world reserves are denominated in yuan.

At this point it would be likely that the worldwide dollar hegemony
will be no more, as it may be displaced by the yuan.

Several leaders of countries were killed for attempting to replace
the dollar for trading with other currencies.

For example, Saddam Hussein, for his intent to use the euro for
trading Iraq’s hydrocarbon riches, and Libya’s Gadhafi, when he
wanted to introduce the Gold-Dinar as a Pan-African trading
currency, thereby freeing Africa from western monetary slavehood.

As we all recall, he was literally lynched by NATO on October 20,
2011 at the initiative of Hillary Clinton with the strong support
of then French President Sarkozy.

By the way, this western monetary stranglehold on Africa prevails
as of this day – a new-old kind of colonization, nobody in the
western mainstream reports on.

Once the new e-RMB (yuan) has been successfully tested locally
it will be launched internationally.

While China’s new PBC-backed cyber-currency’s
internationalization will make the yuan even more attractive among
trading partners, and also as a reserve currency, China may
simultaneously divest its huge reserves of US Treasury bonds (about
US$1.2 trillion) into purchasing assets abroad paid in US-dollars.

The Belt and Road investments maybe a suitable vehicle to reduce
dollar holdings at home.

In the current high corona debt-crisis around the world, especially
the Global South, China may also consider a program of Debt
Jubilee (debt forgiveness) to the poorest partner countries which
may be already, or potentially be, future Belt and Road associates.

At present and since October 2016, the Renminbi (Chinese yuan) is
part of a 5-currency basket at the IMF that constitutes the Special
Drawing Rights (SDR), the world’s ultimate virtual reserve currency.

The SDR share distribution is US-dollar 41.73%, euro 30.93%,
Chinese yuan 10.92%, Japanese yen 8.33% and the British pound
8.09%.

This currency allocation to the SDR is disproportionate with regard
to the economic strength of the respective countries, especially
China, the world’s second largest economy, rapidly moving towards
first place.

China may want to vigorously renegotiate with the IMF her currency
proportion in the SDR, as well as reviewing country quotas which by
now are out-of-line with member countries’ economic weight.

An IMF capital increase is overdue.

The IMF capital base today is SDR 477 billion (US$ 677 billion).

In addition, there is the temporary New Arrangement to Borrow
(NAB) which in January 2020 has been doubled to SDR365 billion
(US$ 475 billion), a total resource-base of about US$ 1.15 trillion.

Yet, the IMF already today foresees US$ 1 trillion for additional
corona debt lending and debt forgiveness. Since the NAB is only
a temporary arrangement, a quota increase and review; i.e., a
proper adjustment for China’s economy is more than overdue.

A quota adjustment in favor of China and the corresponding
adjustment of the yuan’s proportion in the SDR basket would
further enhance China’s currency vis-à-vis the rest of the world.

This coupled with an incorruptible cryptocurrency controlled
by China’s Central Bank and possibly backed by gold would be
a formidable reserve currency that most countries would like
as their chief reserve asset.

This, of course, is what Washington is afraid of.

It would clearly endanger and probably crush the global US-dollar
hegemony.

The world would be a better place for it.

Therefore, the current China bashing and attributing guilt for
spreading and mismanaging the corona virus is a sheer farce,
a treachery of the world, a deviation of the real reason behind
Trump’s attempt to demolish China’s reputation around
the globe, namely by doing so, hoping to destroy the rise of
China and the appreciation of the Chinese yuan, and thereby
the yuan’s attractiveness as an investment currency for most
of the rest of the world.

This is pretty similar to the real reason for the 2018-2019 US-China
trade war, initiated by President Trump, had the objective of
ruining the yuan’s reputation in the world arena.

To no avail.

Washington eventually, quietly, and unceremoniously,
lost the conflict over trade.

Despite Trump’s loud declarations to the contrary,
the US needs China much more than vice-versa.

Just look at the Chinese supply chain which the west in particular
the US, cannot replace from one day to the other.

Under President Xi Jinping’s leadership, China has switched gears
rather fast.

Preparations to orient towards Asian markets are in full swing.

China is enhancing relations with Asian markets; i.e., the ASEAN
countries, plus Japan and South Korea.

Members of the SCO (Shanghai Cooperation Organization) are also
a trading market China is already engaged in and may further strengthen it.

The SCO, in addition to China and most of the Central Asian
countries, include also Russia, India and Pakistan – and Iran
is waiting for imminent admission. There's, like Malaysia and
Mongolia are in observer status and also slanted to become
SCO members in due course.

The combination of SCO, ASEAN-plus 3, amounts to more than half
the world population and accounts for more than a third of the
world’s economic output.

This is a formidable global “market share” and will likely increase
with every atrocity – military and economic – Washington is
committing around the globe.

With her new crypto-currency, which eventually will be
internationalized, China is well on her way to fully dedollarize,
with the cyber-yuan replacing the US-dollar as the key trading
and main reserve currency and to displace the United States
as the world’s financial and economic hegemon.

The current China bashing does not prevent China from forging
ahead with her economic activities – trade – and especially the
unstoppable Belt and Road Initiative (BRI) via maritime and land
routes, already counting on 160 partners (about 120 countries
and some 40 multinational organizations) on four continents.

This revolutionary global development scheme will require
trillions of yuans and dollars for investments.

It will also be generating trillions in revenues over time, shared
with BRI partners. All towards a common future for mankind – a
world moving towards an equilibrium with justice, harmony, and
peace.

https://dissidentvoice.org/2020/05/chinas-new-crypto-currency-
first-step-to-full-dedollarization