The United States now gives people a feeling that it is very twisted. To talk about this twistedness, it is still the United States’ route for the future. It does not have a clear plan. In theory, the new leadership team has a ruling program, but it is difficult to grasp the degree of implementation, which makes people feel very awkward.
must follow the president's strategy. The most important task in the future is to deal with US-China relations, but how to deal with it in detail? According to Secretary of State Blinken , it is divided into three parts: competition, cooperation and confrontation. This requires a high level of understanding. I guess not only do outsiders not understand what medicine they need to take, but Americans themselves are also confused.
So in the end, it becomes a comprehensive confrontation first. If you can't resist, you will compete, and if you can't compete, you will cooperate. This requires a process. In actual use, it gives people the feeling that the United States is always thinking about decoupling between China and the United States. Everyone should be familiar with the word decoupling. In fact, it mainly refers to the decoupling between the global supply chain and the industrial chain.
If the global supply chain and industrial chain cooperation established in the past few decades is really decoupled, can the United States really bear this consequence? It just so happened that Guo Shuqing, Secretary of the Party Committee of the People's Bank of China and Chairman of the China Banking and Insurance Regulatory Commission, recently gave a speech on the Lujiazui Forum , which revealed several key information, some of which can answer this question.
The origin of globalization and the international currency status of the US dollar
Before talking about decoupling, we will first talk about how the linkage between the global supply chain and the industrial chain brings huge benefits to the United States. Once you understand the cause, you will naturally understand the consequences, and you will understand the current practice of the United States. In fact, you are selling well when you get cheap, getting the benefits yourself, and want to sell all your allies.
The globalization of the world actually began in in the 1990s. Before the 1990s, there was no such thing as globalization in the world, and there was only regional integration. Why? Because before the 1990s, the world was polarized, and the United States and the Soviet Union fought for hegemony. They each dominated the same group. At this time, they were all divided into camps and had economic cooperation, but there was no unified market rules and systems.
Until After the collapse of of the Soviet Union, the United States became the dominant one. At this time, it had the foundation for global integration and the United States dominated the world's economic and political order. Only by establishing a unified system of rules can the world market be unified. For example, the WTO, the most extensive global economic organization we know, officially started operations on January 1, 1995, almost three years after the collapse of the Soviet Union.
Under the WTO system, the whole world has begun to establish a unified market, and the rules, operations, and the establishment of corresponding systems of this market are all dominated by the United States. As we all know, we joined the WTO in 2001, and it was only when the United States nodded in the end that we truly passed the test.
Then What are the benefits of the United States establishing a global unified market? If you want to talk about one of the biggest benefits, it undoubtedly establishes the international currency status of the US dollar.
We know that the establishment of the petrodollar dollar was in 1974 after the fourth Middle East War of . Because the Arab coalition lost four battles and four defeats, Saudi Arabia and the United States finally signed the petrodollar agreement for peace. Since then, the oil trade in the Middle East has been the only settlement currency. This pattern has continued to this day. In the past, any country that attempts to break this rule has been threatened by the United States war.
Why is oil settlement so important in US dollars that the United States must use war to deter it? Because oil is the blood of industry, after World War II, the world began a wave of industrialization, and oil is a necessity. Binding oil and the US dollar is equivalent to binding the process of industrialized countries.
But this is far from enough. Even today, the world's oil trade volume is still only a small part. In 2017, the overall price of crude oil was between US$40-80/barrel, which is a major fluctuation range in recent years. According to data from the International Trade Center,
In 2017, the global crude oil export volume was US$841.1 billion, accounting for 4.3% of the total value of all global export products.
It can be seen that the US dollar circulation driven by crude oil is relatively limited. So in the mid-1970s, although the US dollar was linked to oil trade, the US dollar's international currency status was not established in one step. The US dollar truly transformed into a global currency and was also related to the establishment of a globally integrated world trade system.
All countries joining the WTO need to negotiate with one of the most important obstacles, which is the formulation of the United States and the United States dominant rules. The most critical of them is to settle trade in the US dollar. In fact, global trade is linked to the US dollar through currency, and there is a comparable standard price. This is indeed an important tool to promote world trade integration.
This approach is somewhat similar to the unified currency and weights and measures that Qin unified the six countries after unifying the six countries. Only after unifying these standards can trade cooperation be quickly promoted. Of course, the United States does not unify the world, but only in terms of trade, it has unified the relevant standards and processes.
For example, using US dollars for trade settlement, establishing a US dollar settlement system SWFIT, establishing a standard process for letters of credit use, and even promoting container standards. All these are different. The most important role of the United States in this is that various industry associations lead the formulation of unified standards and ensure that everyone adopts the same standard system, which greatly accelerates the process of global integration.
The so-called global industrial chain and supply chain are to use the comparative advantages of various countries in the world to divide the industry. In fact, it is equivalent to turning the whole world into a large factory. Those with mines at home mainly mines, those with arable land mainly grow grain, and those with industrial foundation are engaged in production. Then the whole process will be coordinated by the United States.
The United States grasps the most advanced technology research and development and implementation, and other countries produce parts according to different divisions of labor, then find cheap labor, integrate and assemble it not far away, and finally, American multinational companies sell the finished products all over the world.
I have to say that in this way, the whole world has become a unified large market, with production efficiency greatly improved, and the scale of commodity trade has expanded rapidly. The following figure shows the growth trend of global exports of goods. There was a period of rapid growth after the 1990s, but the real rapid increase was after 2001. What happened at that time?
In 2001, China joined the WTO, which was a major event that changed China, a major event that changed the United States and the world. Below is a trend chart of my country's total import and export trade volume. After 2001, it was a clear acceleration turning point, which was completely corresponding to the total global export volume above. After China joined the WTO, it greatly promoted the rapid growth of global integration.
What are the benefits of exponential growth in global goods trade? The demand for the US dollar has also increased in proportion. The settlement volume of the US dollar in international goods trade has always remained above 80%. With the advancement of global integration, the US dollar has begun to truly circulate globally with the trade in goods, and this amount is several orders of magnitude higher than crude oil.
So the binding of the US dollar to oil trade is only laid the first foundation for the world currency, and the binding to globalized goods trade is the key to the US dollar becoming the world currency. International trade in goods makes the US dollar circulate wherever goods are circulated, becoming a global hard currency.
The United States can have its current status, which is inseparable from the contribution of the US dollar. The US dollar's current status is largely dependent on the settlement of goods trade, and goods trade is based on globalization.So now the United States is going to decouple, which will reverse the process of globalization. Isn’t this just digging a grave?
The decoupling of China and the United States is unbearable for the United States
Isn’t it often said that if you have a good relationship with the United States, you will develop well? In fact, this only talks about the appearance of the problem. The essence of the problem is that after the collapse of the Soviet Union, the United States began to dominate the international economic and political order. The United States engages in global economic integration. If you do not integrate into the American camp, there will be no opportunity for development. If you engage in international trade, it will not allow you to join. So where did you get the international market?
Relying on self-sufficiency to develop is equivalent to a country competing with the whole world. For small countries, it is almost impossible. The population and resources are limited, and you cannot create all industries. If you have good relations with the United States and join a link in the entire industrial chain, you can gain room for development.
is the United States that strangled resources, not that you can live a good life by establishing a good relationship with the United States. The key is that you must have value, otherwise India and the United States are considered half-brothers. Why didn’t the United States help India before?
The rapid development of globalization has allowed every country in the industrial chain to produce the part that has its own advantages, and the other part needs to be solved by international trade. The trade in goods requires the use of US dollars, so every country must reserve a certain amount of US dollars, which facilitates trade settlement .
The United States also often uses the advantages of the US dollar to engage in financial harvesting. In this way, for financial security, everyone must have a large amount of US dollars as foreign exchange reserves. In this way, the whole world needs US dollars. According to the United States' vision, the US dollar is just around the corner. He did not expect that there was a bug in this system, and this bug is China.
In the process of integrating into globalization, the most unexpected thing that the United States did is that we join the global industrial chain, which is to do part of the link, at most it is to build a mid-range and low-end one. But I never expected that we would develop into the entire industrial chain later. The so-called full industrial chain is the entire industrial chain in the literal sense, and all, no one will fall behind.
According to World Bank data, China's manufacturing added value surpassed the United States to become the largest manufacturing country in 2010. In 2020, my country's foreign export volume accounted for 15.8% of the world, almost twice that of the second place in the United States. China is the only country in the world that has all the industrial categories in the United Nations industrial classification. Among the more than 500 major industrial products in the world, more than 220 industrial products are the first in the world in terms of output.
Originally, global integration is a chain, a country gathers a few links and makes a circle, but now China itself is a circle, so where is the United States? The United States is mainly attached to the US dollar, and the US dollar is attached to goods. The goods are mainly produced, trade and circulation here. From this perspective, the United States has only a small part of the high-end industry chain and has been undermined. If there is no US dollar, then it should be someone else who dominates the international industrial chain and supply chain.
What really made the United States unable to bear was the failure of the financial war harvest in 2015, and our currency issuance changed anchors. I explained in detail in the article "Highlights of in 2015, the United States failed to harvest wealth, and became the turning point of the country's operation. This made the United States completely desperate. The first step that the United States thought of at this time was to reorganize the global supply chain and industrial chain, and get rid of the dependence on us in goods production and trade .
On the surface, this seems to be the anti-globalization promoted by the United States. In fact, the real purpose of the United States is to build an industrial chain without China, that is, there is no China in globalization. How dare you think about this? Anyway, the United States really dares to think, but it is hard to say whether it dares to do it.
And there is a passage in Chairman Guo’s recent speech that talks about this:
China’s economy achieved positive growth in 2020, which promoted the economic recovery of neighboring countries and major trading partners, and prevented the world economy from falling into greater shrinkage. China has supplied about half of the world's final products for a considerable period, and has generally not raised the offshore export price, laying a solid foundation for global epidemic prevention and control and economic recovery.If the large number of currencies issued by the most developed countries has formed a source of motivation to drive global inflation, then the goods produced by hundreds of millions of Chinese workers are the anchor of stabilizing global inflation. What does
mean? That is to say, basic commodities are mainly provided by us. We originally had the right to price, but we took the overall situation into consideration and did not raise prices, which made great contributions to the world's low inflation. To be more profound, if the United States exports inflation by pushing up commodities, then the appreciation of the RMB can also increase the offshore export price and return inflation. If it is a little deeper, at the root, if the United States really wants to decouple China and the United States, then China's exports of goods will not accept the US dollar at all. The US dollar is now so rich. If China does not accept the US dollar for trade settlement, then the US dollar that cannot be bought in physical goods is a piece of waste paper.
So although the United States wants to decouple, it must be possible after the industrial chain that replaces China is established. However, this epidemic has caused India to retreat instead of advancing. Who else can replace us? Which country has the ability to provide about half of the world's final products? It’s not that I look down on everyone on the earth. In this regard, there are only two countries on the earth that can be compared, one is China and the other is a foreign country.
China is now the largest trading partner of more than 120 countries in the world. If the United States really wants to decouple, China will inevitably no longer use the US dollar for trade settlements. This is a chain reaction, which will open up a global de-dollarization cycle. Once this leader is opened, can the United States bear it?
Then many people will naturally ask, with this killer weapon, why don’t we send the United States a ride?
Finally, make the worst preparations
This requires a dialectical view of this issue. Taking the initiative to do this is equivalent to throwing an atomic bomb during a war. This is equivalent to turning the table over and globalization will be completely finished. Obviously, at least at this stage, this is not in line with our strategic interests. For us, we must have the ability to turn over the table at any time, but we must also have the patience to not turn over the table.
We actually take the strategic initiative and only need time to fill in the upstream of the industrial chain. Then the global industrial chain is not India to replace China, but China to replace the United States. If the physical goods are not stored, where will the US dollar be attached? The decoupling in the United States, if it really happens, the US dollar may depreciate wildly. Then why does the United States know it well but still have to do a real show?
According to the nature of the United States, it is more like leading allies into the ditch and deliberately pushing the world to the road of division. At worst, a sharp turn will take at the last moment and suddenly compromise with the opponent. At this time, the United States has another last trick: die of fellow Taoists and not die of me.
