Jay, not sure whether you have read this article, and what do you think about this.
China vs the almighty dollar
By Henry C K Liu
atimes.com
Quote:
"China has the power to make the yuan an alternative reserve currency in world trade by simply denominating all Chinese export in yuan. This sovereign action can be taken unilaterally at any time of China's choosing. All the State Council (the Chinese government's cabinet) has to do is to announce that as of, say, October 1, 2002, all Chinese exports must be paid for in yuan, making it illegal for Chinese exporters to accept payment in any other currencies. This will set off a frantic scramble by importers of Chinese goods around the world to buy yuan at the State Administration for Foreign Exchange (SAFE), making the yuan a preferred currency with ready market demand. Companies with yuan revenue no longer need to exchange yuan into dollars, as the yuan, backed by the value of Chinese exports, becomes universally accepted in trade. Members of the Organization of Petroleum Exporting Countries (OPEC), which import sizable amount of Chinese goods, would accept yuan for payment for their oil.
In 2000, the United States exported US$781.1 billion (12.3 percent of world exports - 11 percent year-to-year growth) and imported $1.2576 trillion (18.9 percent of world imports - 19 percent year-to-year growth). Germany exported $551.5 billion (8.7 percent of world exports - 1 percent year-to-year growth) and imported $502.8 billion (7.5 percent of world imports - 6 percent year-to-year growth). Japan exported $479.2 billion (7.5 percent of world exports - 14 percent year-to-year growth) and imported $379.5 billion (5.7 percent of world imports - 22 percent year-to-year growth). France exported $298.1 billion (4.7 percent of world exports - 1 percent year-to-year decline) and imported $305.4 billion (4.6 percent of world imports - 4 percent year-to-year growth). The United Kingdom exported $337 billion (5.1 percent of world export - 5 percent year-to-year growth) and imported $284.1 billion (4.5 percent of world imports - 6 percent year-to-year growth).
China exported $249.3 (3.9 percent of world exports - 28 percent year-to-year growth) and imported $225.1 billion (3.4 percent of world imports - 36 percent year-to-year growth). Hong Kong exported $214.2 billion (3.2 percent of world exports- 19 percent year-to-year growth) and imported $202.4 billion (3.2 percent of world imports - 16 percent year-to-year growth).
China (including Hong Kong) exported more than $463 billion (7.3 percent of world exports) in 2000 and imported about $428 billion, yielding a trade surplus of around $35 billion. If all Chinese exports are paid in yuan, China will have no need to hold foreign reserves, which currently stand at more than $200 billion. And if the Hong Kong dollar is pegged to the yuan instead of the dollar, Hong Kong's $100 billion foreign-exchange reserves can also be freed for domestic restructuring and development. " |
