The Chinese Politburo leaders hate to miss a chance to flex their financial muscle with grand and threatening statements during state visits. Ahead of his trip to Washington President Hu has spoken of the steps being taken towards replacing the dollar with the yuan as the major reserve currency. Following November’s Sino-Russian agreement to conduct trade in their own currencies, the US’s privileged status as manufacturer of the global currency must be under at least some level of threat.
A vendor in Washington prepares for the upcoming change in the international currency system
However people cleverer than me have argued that while not unforseeable, the radical overhaul of trade or investment policy required to allow the world to accumulate enough RMB might prove damaging to the Chinese economy. This may therefore be yet further proof of the existence of a special Chinese government department, tasked with formulating statements to court controversy and belittle foreign dignitaries wherever possible (see Hu’s recent comments on youth and energy of current British government). Clearly this is fun and can only be encouraged.
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Robespierre
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