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The Global Times is a daily tabloid newspaper under the auspices of the Chinese Communist Party’s flagship newspaper, the People’s Daily, commenting on international issues from a Chinese ultra-nationalistic perspective. Wikipedia
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Global Times
China confident ‘de-dollarization’ is fast underway amid tense times
By Wang Wen Source: Global Times Published: 2020/7/20 19:31:41
A global trend toward “de-dollarization” has already begun. The last piece of “load-bearing wall” of the “US Empire State Building” has cracked, in other words.
Global policies for “de-dollarization” include sharply reducing US debt holdings, dropping US dollar’s status as an anchor currency, increasing non-dollar bulk commodity trade, growing the reserve of non-dollar currencies, and ramping up gold’s hedge against the dollar.
From the perspective of US debt, 22 consecutive months from April 2018 to March 2020 saw global central banks reduce their US debt holdings. In March, the US Federal Reserve pledged unlimited quantitative easing, purchasing over $1 trillion Treasuries within a month. The Federal Reserve has become the largest receiver of US Treasuries.
In March, yields on both one-month and three-month Treasury bills were negative, while the yield for the 10-year Treasury hit below 1 percent for the first time, according to media reports. This exemplifies global anticipations of a weaker US economy.
The possibility cannot be ruled out that a small number of foreign investors in the short run will increase their holdings of US Treasuries. However, in the long run, overseas investors will likely reduce their US debt holdings. The Federal Reserve, which has spent over half a century building its global credibility, has become the last ditch of US Treasuries.
In recent years, many G20 members, such as China, France, Germany, and Russia, have reduced their utilization of the US dollars in trade deals.
According to information disclosed by the Society for Worldwide Interbank Financial Telecommunication (SWIFT), in May, the share of US dollars in the international payment market was 40.88 percent, a drop from 44.1 percent in March.
The market estimates that although there is a long way to realize “de-dollarization,” other countries are becoming restless to achieve it.
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Since the 21st century began, many doubters of “de-dollarization” have been holding that global “de-dollarization” is still in its infancy. They feel markets are mainly dependent on the US dollar. But the COVID-19 pandemic seems to have triggered a faster “de-dollarization” progress. Considering other countries’ diplomatic decisions and the market’s expectations for the US dollar, one can judge that the US can never form a strategic containment circle against China.
China is confident in this.
The author is professor and executive dean of the Chongyang Institute for Financial Studies at Renmin University of China, and executive director of China-US People-to-People Exchange Research Center. wangwen2013@ruc.edu.cn
https://www.globaltimes.cn/content/1195115.shtml
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The South China Morning Post.
China bought more US debt in May despite talk of financial war amid rising trans-Pacific tensions
China added US$10.9 billion of the US Treasury securities in May, the first purchase since February, although the US$1.08 trillion total is slightly down from 12 months earlier
Tensions have been rising between Beijing and Washington over the coronavirus, Hong Kong and Xinjiang, with questions raised over China’s access to the US dollar
Published: 10:52am, 21 Jul, 2020
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