http://www.atimes.com/atimes/World/WOR-02-151013.html
The birth of the 'de-Americanized' world
By Pepe Escobar
This is it. China has had enough. The (diplomatic) gloves are off. It's time to build a "de-Americanized" world. It's time for a "new international reserve currency" to replace the US dollar.
It's all here, in a Xinhua editorial, straight from the dragon's mouth. And the year is only 2013. Fasten your seat belts - and that applies especially to the Washington elites. It's gonna be a bumpy ride.
Long gone are the Deng Xiaoping days of "keeping a low profile". The Xinhua editorial summarizes the straw that broke the dragon's back - the current US shutdown. After the Wall Street-provoked financial crisis, after the war on Iraq, a "befuddled world", and not only China, wants change.
This paragraph couldn't be more graphic:
Note that Beijing is not advocating completely smashing the Bretton Woods system - at least for now, but it is for having more deciding power. Sounds reasonable, considering that China holds slightly more weight inside the IMF than Italy. IMF "reform" - sort of - has been going on since 2010, but Washington, unsurprisingly, has vetoed anything substantial.
As for the move away from the US dollar, it's also already on, in varying degrees of speed, especially concerning trade amongst the BRICS group of emerging powers (Brazil, Russia, Indonesia, China and South Africa), which is now overwhelmingly in their respective currencies. The US dollar is slowly but surely being replaced by a basket of currencies.
"De-Americanization" is also already on. Take last week's Chinese trade charm offensive across Southeast Asia, which is incisively leaning towards even more action with their top commercial partner, China. Chinese President Xi Jinping clinched an array of deals with Indonesia, Malaysia and also Australia, only a few weeks after clinching another array of deals with the Central Asian "stans".
Chinese commitment to improve the Iron Silk Road reached fever pitch, with shares of Chinese rail companies going through the roof amid the prospect of a high-speed rail link with and through Thailand actually materializing. In Vietnam, Chinese Premier Li Keqiang sealed an understanding that two country's territorial quarrels in the South China Sea would not interfere with even more business. Take that, "pivoting" to Asia.
All aboard the petroyuan
Everyone knows Beijing holds Himalayas of US Treasury bonds - courtesy of those massive trade surpluses accumulated over the past three decades plus an official policy of keeping the yuan appreciating very slowly, yet surely.
At the same time, Beijing has been acting. The yuan is also slowly but surely becoming more convertible in international markets. (Just last week, the European Central Bank and the People?s Bank of China agreed to set up a US$45-$57 billion currency swap line that will add to the yuan's international strength and improve access to trade finance in the euro area.)
The unofficial date for full yuan convertibility could fall anywhere between 2017 and 2020. The target is clear; move away from piling up US debt, which implies, in the long run, Beijing removing itself from this market - and thus making it way more costly for the US to borrow. The collective leadership in Beijing has already made up its mind about it, and is acting accordingly.
The move towards a full convertible yuan is as inexorable as the BRICS move towards a basket of currencies progressively replacing the US dollar as a reserve currency. Until, further on down the road, the real cataclysmic event materializes; the advent of the petroyuan - destined to surpass the petrodollar once the Gulf petro-monarchies see which way the historical winds are blowing. Then we will enter a completely different geopolitical ball game.
We may be a long way away, but what is certain is that Deng Xiaoping's famous set of instructions is being progressively discarded; "Observe calmly; secure our position; cope with affairs calmly; hide our capacities and bide our time; be good at maintaining a low profile; and never claim leadership."
A mix of caution and deception, grounded on China's historical confidence and taking into consideration serious long-term ambition, this was classic Sun Tzu. So far, Beijing was laying low; letting the adversary commit fatal mistakes (and what a collection of multi-trillion-dollar mistakes... ); and accumulating "capital". The time to capitalize has now arrived. By 2009, after the Wall Street-provoked financial crisis, there were already Chinese rumblings about the "malfunctioning of the Western model" and ultimately the "malfunctioning of Western culture".
Beijing has listened to Dylan (with Mandarin subtitles?) and concluded yes, the times they-are-a-changing. With no foreseeable social, economic and political progress - the shutdown is just another graphic illustration, if any was needed - the US slide is as inexorable as China, bit by bit, spreading its wings to master 21st century post-modernity.
Make no mistake; the Washington elites will fight it like the ultimate plague. Still, Antonio Gramsci's intuition must now be upgraded; the old order has died, and the new one is one step closer to being born.
The birth of the 'de-Americanized' world
By Pepe Escobar
This is it. China has had enough. The (diplomatic) gloves are off. It's time to build a "de-Americanized" world. It's time for a "new international reserve currency" to replace the US dollar.
It's all here, in a Xinhua editorial, straight from the dragon's mouth. And the year is only 2013. Fasten your seat belts - and that applies especially to the Washington elites. It's gonna be a bumpy ride.
Long gone are the Deng Xiaoping days of "keeping a low profile". The Xinhua editorial summarizes the straw that broke the dragon's back - the current US shutdown. After the Wall Street-provoked financial crisis, after the war on Iraq, a "befuddled world", and not only China, wants change.
This paragraph couldn't be more graphic:
Instead of honoring its duties as a responsible leading power, a self-serving Washington has abused its superpower status and introduced even more chaos into the world by shifting financial risks overseas, instigating regional tensions amid territorial disputes, and fighting unwarranted wars under the cover of outright lies.The solution, for Beijing, is to "de-Americanize" the current geopolitical equation - starting with more say in the International Monetary Fund and World Bank for emerging economies and the developing world, leading to a "new international reserve currency that is to be created to replace the dominant US dollar".
Note that Beijing is not advocating completely smashing the Bretton Woods system - at least for now, but it is for having more deciding power. Sounds reasonable, considering that China holds slightly more weight inside the IMF than Italy. IMF "reform" - sort of - has been going on since 2010, but Washington, unsurprisingly, has vetoed anything substantial.
As for the move away from the US dollar, it's also already on, in varying degrees of speed, especially concerning trade amongst the BRICS group of emerging powers (Brazil, Russia, Indonesia, China and South Africa), which is now overwhelmingly in their respective currencies. The US dollar is slowly but surely being replaced by a basket of currencies.
"De-Americanization" is also already on. Take last week's Chinese trade charm offensive across Southeast Asia, which is incisively leaning towards even more action with their top commercial partner, China. Chinese President Xi Jinping clinched an array of deals with Indonesia, Malaysia and also Australia, only a few weeks after clinching another array of deals with the Central Asian "stans".
Chinese commitment to improve the Iron Silk Road reached fever pitch, with shares of Chinese rail companies going through the roof amid the prospect of a high-speed rail link with and through Thailand actually materializing. In Vietnam, Chinese Premier Li Keqiang sealed an understanding that two country's territorial quarrels in the South China Sea would not interfere with even more business. Take that, "pivoting" to Asia.
All aboard the petroyuan
Everyone knows Beijing holds Himalayas of US Treasury bonds - courtesy of those massive trade surpluses accumulated over the past three decades plus an official policy of keeping the yuan appreciating very slowly, yet surely.
At the same time, Beijing has been acting. The yuan is also slowly but surely becoming more convertible in international markets. (Just last week, the European Central Bank and the People?s Bank of China agreed to set up a US$45-$57 billion currency swap line that will add to the yuan's international strength and improve access to trade finance in the euro area.)
The unofficial date for full yuan convertibility could fall anywhere between 2017 and 2020. The target is clear; move away from piling up US debt, which implies, in the long run, Beijing removing itself from this market - and thus making it way more costly for the US to borrow. The collective leadership in Beijing has already made up its mind about it, and is acting accordingly.
The move towards a full convertible yuan is as inexorable as the BRICS move towards a basket of currencies progressively replacing the US dollar as a reserve currency. Until, further on down the road, the real cataclysmic event materializes; the advent of the petroyuan - destined to surpass the petrodollar once the Gulf petro-monarchies see which way the historical winds are blowing. Then we will enter a completely different geopolitical ball game.
We may be a long way away, but what is certain is that Deng Xiaoping's famous set of instructions is being progressively discarded; "Observe calmly; secure our position; cope with affairs calmly; hide our capacities and bide our time; be good at maintaining a low profile; and never claim leadership."
A mix of caution and deception, grounded on China's historical confidence and taking into consideration serious long-term ambition, this was classic Sun Tzu. So far, Beijing was laying low; letting the adversary commit fatal mistakes (and what a collection of multi-trillion-dollar mistakes... ); and accumulating "capital". The time to capitalize has now arrived. By 2009, after the Wall Street-provoked financial crisis, there were already Chinese rumblings about the "malfunctioning of the Western model" and ultimately the "malfunctioning of Western culture".
Beijing has listened to Dylan (with Mandarin subtitles?) and concluded yes, the times they-are-a-changing. With no foreseeable social, economic and political progress - the shutdown is just another graphic illustration, if any was needed - the US slide is as inexorable as China, bit by bit, spreading its wings to master 21st century post-modernity.
Make no mistake; the Washington elites will fight it like the ultimate plague. Still, Antonio Gramsci's intuition must now be upgraded; the old order has died, and the new one is one step closer to being born.
http://www.bloomberg.com/news/2013-10-14/china-s-biggest-reserves-jump-since-2011-shows-inflow.html
China’s Biggest Reserves Jump Since 2011 Shows Inflow
By Bloomberg News - Oct 14, 2013 10:15 PM ET
China’s foreign-exchange reserves rose last quarter by the most in more than two years, a sign the government’s efforts to protect growth attracted money even as developing nations from India to Indonesia saw capital exit.
Reserves were a record $3.66 trillion at the end of September, the People’s Bank of China said yesterday in Beijing, up from $3.5 trillion in June. The median projection was $3.52 trillion in a Bloomberg News survey of seven economists.
A man walks past a sign featuring a fist holding U.S. dollars in central Beijing. Foreign-exchange reserves will probably keep growing for another quarter before outflows resume on a tapering of bond-buying by the Federal Reserve, said Liu Dongliang, a senior analyst at China Merchants Bank Co. in Shenzhen. Photographer: Natalie Behring/Bloomberg
Oct. 11 (Bloomberg) -- Helen Qiao, chief Greater China economist at Morgan Stanley in Hong Kong, talks about the mainland's growth outlook and government policies. She speaks with John Dawson on Bloomberg Television's "On the Move." (Source: Bloomberg)
Workers install Chinese flags on a lamp post on a street in Tianjin, China. Photographer: Tomohiro Ohsumi/Bloomberg
The yuan rose 0.2 percent to 6.1079 per dollar after touching the strongest level since the government unified official and market exchange rates at the end of 1993. Photographer: Nelson Ching/Bloomberg
The data suggest Premier Li Keqiang’s efforts to boost expansion stoked capital inflows while emerging markets suffered outflows on concern the U.S. Federal Reserve would taper monetary stimulus. The yuan strengthened by the least in five quarters in the July-September period, signaling central bank intervention to slow gains in the currency.
“The foreign-exchange data probably reflects China’s safe-haven status and suggests hot money came into the country during the period of market turmoil,” said Timothy Condon, ING Groep NV head of Asia research in Singapore.
The yuan advanced to the strongest level since the government unified official and market exchange rates at the end of 1993, rising 0.02 percent to 6.1067 per dollar as of 9:36 a.m. in Shanghai. The currency strengthened 0.2 percent yesterday. It gained about 0.3 percent in the third quarter, following a 1.2 percent increase in the previous period.
Growth Pickup
The world’s second-biggest economy probably grew 7.8 percent last quarter, up from 7.5 percent in the April-June period, based on the median estimate in a Bloomberg News survey ahead of a report due Oct. 18. Previous reports showed exports unexpectedly fell in September and two manufacturing gauges rose less than estimated, indicating limits on a recovery seen in July and August data.
The central bank didn’t give an explanation for the increase in reserves. It didn’t immediately respond to a faxed request for comment from Bloomberg News.
“The market is saying that China data is improving,” saidThomas Harr, head of Asia local-markets currency and rates strategy at Standard Chartered Plc in Singapore. “In the very short term the cyclical data has started to improve and that is what is supporting the currency and thereby also inflows into the currency.”
Zhou Hao, Shanghai-based economist at Australia & New Zealand Banking Group Ltd., said the surge in reserves reflects capital inflows and the central bank’s intervention as it bought “intensively” to prevent the yuan from strengthening.
Shadow Finance
New yuan loans topped estimates in the central bank data while the broadest measure of credit fell from August, as authorities try to support expansion without boosting shadow finance. Money-supply growth slowed in September, with M2, the broadest gauge, rising 14.2 percent from a year earlier.
Aggregate financing was 1.4 trillion yuan ($230 billion) in September, compared with 1.65 trillion yuan a year earlier. New yuan loans from banks were 787 billion yuan, exceeding the 675 billion yuan median estimate of economists. They accounted for 56 percent of aggregate financing, compared with about 45 percent in August and 87 percent in July, according to previously released data.
“The PBOC may have implicitly expanded new loan quotas for banks as the authorities try to rein in the shadow banking sector,” Chang Jian, China economist at Barclays Plc inHong Kong, said in a report.
Chinese banks have advanced about 1.3 trillion yuan of mortgage loans in the first eight months compared with 300 billion yuan in the first half of 2012, Lian Ping, Shanghai-based chief economist at Bank of Communications Co., said last week.
Loan Quotas
Banks are running out of quotas to offer more mortgage loans in the rest of the year and without financing support, home prices are unlikely to gain significantly, Lian said.
Elsewhere today in the Asia-Pacific region, Sri Lanka’s central bank unexpectedly cut benchmark interest rates by a half percentage-point to boost growth amid what it said were “concerns regarding the global economic recovery.” Japan releases final figures on August industrial production.
Europe will see reports on inflation in France and the U.K., while in the U.S., the Federal Reserve Bank of New York provides an index on manufacturing in the New York region.
China’s foreign-exchange reserves will probably keep growing for another quarter before outflows resume on a tapering of bond-buying by the Fed, said Liu Dongliang, a senior analyst at China Merchants Bank Co. in Shenzhen. The holdings are rising in part because Chinese companies are selling their dollars for yuan, Liu said.
“China’s stable currency, large current account surplus and robust financial conditions could make China a defensive place when some other emerging markets were hit by a possible U.S. QE tapering,” Bank of America Corp. economists including Lu Ting, head of Greater China economics, and Zhi Xiaojia said in a note, referring to quantitative easing.
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