According to Taiwan media reports, under the influence of inflation , the Russian-Ukraine war and other factors, the world's financial transaction order has changed, and the strong position of the US dollar has gradually been shaken. Recently, cement companies and Russia purchased coal and were required to settle in RMB; Australian international mining giant BHPbilliton also settled in RMB when exporting iron ore sand to Tianjin, China. Taiwanese media person Chen Fengxin pointed out that many countries around the world have begun to accept or even actively promote trade settlements in RMB. Although they will not immediately replace the sovereign currency status of the US dollar, it still shows that the world's dependence on the US dollar is gradually decreasing.
Chen Fengxin mentioned in the online program "The Windward Dragon and Phoenix" that Russia, as the seller, requires transactions in RMB, which is beneficial to them who are being sanctioned by the United States. It can make some mistakes when the United States bans the SWIFT international settlement system and uses rubles transactions and makes it extremely inconvenient to trade. In response to Australia, which had previously had poor relations with China and had repeatedly boycotted exports, it also agreed to trade in RMB. Chen Fengxin said that this was not accidental, but a clue in the internationalization of the RMB.
Chen Fengxin further pointed out that this may be the follow-up effect of the 2008 financial tsunami. In 2009, China called on the international monetary funds to include the RMB in the withdrawal rights, and the withdrawal rights can work in rescuing the international economic crisis.
, but this also attracted the attention and opposition of the United States. Chen Fengxin believes that although the United States did not believe that the RMB had the ability to challenge the hegemony of the US dollar at the time, it was still possible in the long run. In the end, the International Monetary Fund included the RMB in Special Draw Rights in 2015. In addition, many questions about the hegemony of the US dollar began in 2008 and 2009, and have a lot to do with the recession caused by improper credit, expansion and control within the United States.
Chen Fengxin pointed out that under the active promotion of China, Israel, South Africa, and many countries in the Middle East have included the RMB in the foreign exchange reserves . Although the proportion is not high, it has great symbolic significance. In addition, 7 countries in ASEAN signed a local currency swap mechanism with China; Russia, Australia and others have also begun to promote the use of RMB as a trade settlement currency; the proportion of transactions in RMB in Southeast Asia has also increased year by year. Although all signs cannot be said to replace the hegemony of the US dollar, their influence will indeed be weakened, and the acceptance of the RMB will also increase.
In response to changes in currency status, Chen Fengxin said that the strong sovereign currency will not be replaced by the newly emerging currency immediately, just like the pound that was hegemonic Britain in the 19th century, which is still an important reserve currency in the world today. "The veterans do not die, they just gradually wither." Chen Fengxin quoted the famous saying of the late US General MacArthur , referring to the distrust of the US dollar and the financial system established by the United States accumulated since the financial tsunami. In addition, countries realize that the US dollar can sanction or boycott such as Russia with its hegemony, or even confiscate its foreign exchange deposit, and will begin to seek other ways out. From the perspective of economic rationality, when countries trade with China, deducting layer-by-layer exploitation such as exchange of third-party currencies and handling fees from financial institutions can reduce costs.
As for the financial trend of RMB trade settlement, what impact will it have on China? Chen Fengxin pointed out that when the world's financial dependence on the US dollar decreases, China does not need to have so many US dollars to save, so it can continue to sell US government bonds . She pointed out that from December to May 2021, China's U.S. government bonds held by China have dropped below 1 trillion, hitting a 10-year low; and as the gradual rise in the RMB status, we must still observe how China's own economy develops and whether it maintains rapid growth relative to the world in the future, so as to know the final direction of the long road of internationalization of the RMB. (Editor: Fang Yanyan)
