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Preface
In early April, U.S. Treasury Secretary Janet Yellen had just finished her visit to China, and not long after, Blinken arrived in Shanghai yesterday afternoon.
After Blinken arrived in Shanghai, news came from the United States that the United States would impose targeted "sanctions" on the mainland, intending to find a reason to kick the mainland out of the currency conversion system.
Russia was kicked out of the system by the United States earlier, will the mainland also be kicked out of the international monetary settlement system? What will be the consequences of such a situation?
A financial crisis in the United States?
As early as March last year, a number of banks in the United States went bankrupt, although the government had made a commitment, and President Joe Biden tweeted that depositors' deposits would be cashed out when needed.
Even if they are promised, the people are still unwilling to pay, and everyone is generally anxious.
Because of the bankruptcy of the banks, the stocks of financial institutions in the United States also began to fall sharply.
This year, the Federal Reserve has greatly reduced the holding rate of US bonds, which used to be a large proportion of the mainland's holdings of US bonds, and now it is also constantly reducing the sale of US bonds.
Not only has the U.S. debt crisis emerged, but the U.S. in other areas is also not at peace.
For a variety of reasons, the current U.S. fiscal deficit is rising, which means that the U.S. Treasury will have to spend far more than it earns to keep the fiscal deficit rising.
Moreover, the United States is not only facing a deficit crisis, but the national debt of the United States is also growing at an alarming rate every day, and the debt of the United States has reached 35 trillion dollars so far.
In order to stimulate the economy, the United States not only relaxed policies, but also increased national financial expenditures.
Although this approach was able to allow the country's economy to recover quickly, it also left hidden dangers.
As one of the world's largest economies, the currency of the United States is used as an international currency all year round, and almost all countries need to use the dollar for foreign trade, so the dollar and most countries are very deeply linked.
SWIFT system
In order to be able to conduct international trade transactions more safely, the SWIFT system was born, because of its efficient, convenient and safe characteristics, most countries will choose to join, to facilitate their foreign trade.
After entering the system, foreign trade needs to be traded in US dollars, but the exchange rate of the US dollar is not stable, and the value of the US dollar changes after it fluctuates, and the United States can profit from it.
The SWIFT organization has always been controlled by the United States, so the United States has also made a lot of money in it, and the United States will use this money to invest around the world.
Now that there is a crisis in the United States, Japan, as the "little brother," may be the most affected.
Recently, the yen has been depreciating, and now the exchange rate of the yen against the dollar has hit a record low, and the United States can barely maintain its status as a "world currency" by taking advantage of this "harvest" of Japan.
It is also due to the fact that the currency conversion system is controlled by the United States, and the United States also uses it to impose economic sanctions on countries that are not beneficial to itself, and Russia is a good example.
Soon after the start of the Russia-Ukraine conflict, the United States, together with a group of major powers, kicked Russia out of SWIFT on the grounds that Russia would harm the global economy.
This is undoubtedly a heavy blow to Russia, which is currently at war, and nearly half of Russia's export trade will disappear, directly reducing trade revenue by about 30%.
Although this financial sanction is a big deviant measure for Russia, it is also an opportunity, the beginning of Russia's "de-dollarization", but it is also a long process.
SWIFT is almost controlled by the United States, and now during Blinken's visit to China, there are voices kicking China out of the system.
If SWIFT is really left, what will be the impact on the mainland?
"De-dollarization"
The Wall Street Journal and many other U.S. media have reported that the United States is preparing to impose "economic sanctions" on China and kick China out of SWITF, and the reason used is that the mainland has close ties with Russia and will pose a threat to other countries.
Kicking China out of SWIFT is a bargaining chip during Blinken's visit to China.
If it really withdraws from the system, it is indeed a double-edged sword for the mainland, many enterprises in the mainland are engaged in foreign trade, and if they leave the currency conversion system, the impact on the enterprises is also very huge.
A sudden reduction in trade volumes would cost these companies a lot of money, as happened to the Russian companies that were kicked out in the first place.
Although their "de-dollarization" has begun to bear fruit, and even without the dollar, the economy has not decayed much, but the road has been difficult.
After all, the mainland is peace-loving and will not take the initiative to propose "de-dollarization"; after all, it is basically settled in US dollars in the international community, and rashly proposing to withdraw will have incalculable consequences for foreign trade.
However, the mainland is not a soft persimmon, although it will not take the initiative to break away from the organization, but now it is also actively expanding the value of the renminbi in the world and creating a system of using the renminbi for settlement.
If Blinken really uses SWIFT as a bargaining chip, then the mainland is now true, because it cannot use US dollars for settlement, then it can ask the other party to use RMB for transactions.
After all, China's trade commodities are almost irreplaceable in the international arena, so with the increase in the number of currency exchanges, the status of the renminbi in the international community will become higher and higher.
Then the process of "de-dollarization" of the mainland will be faster and faster, and the impact of the dollar on the mainland will be almost negligible.
Therefore, it is not that the RMB cannot be separated from the US dollar, on the contrary, we can develop very well without the US dollar.
epilogue
In fact, at present, the US dollar is not the only currency for trade between countries, many countries are using the currencies of other major countries for trade, which means that the influence of the US dollar in the world is still there, but it is not irreplaceable.
If Blinken intends to use this to "threaten" the mainland to agree to something, it is actually only speeding up the process of "de-dollarization" of the mainland.
Therefore, the mainland will not agree to anything that harms its interests, and it is impossible for the United States to "cut leeks" on the mainland.
Text | ST
Edit | Canned green oranges
Resources:
GLOBE NEWSWIRE, April 25, 2024 -- U.S. Secretary of State Antony Blinken arrived in Shanghai to begin his visit to China
XINHUA, April 21, 2024 (Xinhua) -- IMF: U.S. deficit poses 'significant risk' to global economy
China News Network, February 27, 2022 - Will the Russian economy be devastated by being kicked out of SWIFT?
Guangming.com, April 25, 2024 -- The yen fell below 155 against the dollar
Observer.com, April 24, 2024 -- To provide "bargaining chips" for Blinken's visit to China, and to sanction some Chinese banks?
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