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View Full Version : Is China abandoning the U.S. Dollar?



vladimir_seroff
25-06-2009, 10:45
Was it reasonable to suggest that "China should use more of its $1.95 trillion in foreign exchange reserves to buy energy and natural resource assets?"

CNBC: China Should Buy Gold to Hedge Dollar Fall - China * Asia * News * Story - CNBC.com (http://www.cnbc.com/id/31535631)

Quote: "China should buy more gold because the U.S. dollar is poised for a fall and the metal is needed to support the greater international role envisaged for the yuan, a senior researcher with the ruling Communist Party said on Thursday.

Li Lianzhong, who heads the economic department of the Party's policy research office, said China should use more of its $1.95 trillion in foreign exchange reserves to buy energy and natural resource assets.

Speaking at a foreign exchange and gold forum, Li also said that buying land in the United States was a better option for China than buying U.S. Treasury securities. ..."

quincy
25-06-2009, 13:44
it's a tricky situation.
If China abandons the dollar then a lot of its assets that are invested in the US (as Treasury Bonds etc) will depreciate. Japan, the Gulf states, Russia and others also have large assets in USD

Kvartiraokhotnik
25-06-2009, 19:30
True Quicy.

But at the rate the FED is printing, their dollar assets will depreciate with inflation anyway. If they dump the dollar they bring the US to their knees, and without a single shot being fired. I think the only reason they havent already dumped it is precisely because they understand that such an act would be a declaration of war, and the US would pick up that gauntlet. So the Chinese are playing the game, and keeping their cards close to their chests. Personally, i reckon this is like a poker game and one where everyone is bluffing. I believe the gold held by the FED is probably much less than claimed (part of the gold price suppresion. see Gold Anti-Trust Action Committee | Exposing the long-term manipulation of the gold market (http://www.gata.org) ), whilst the gold held by the Chinese (maybe the Russians too) is much more than claimed. No player wants to admit the truth and effect the gold price to their ultimate disadvantage....so everyone bluffs with an understanding that the others are bluffing too.

Perhaps the Chinese are waiting for the IMF to put all their gold on the market. I hear the 400 tonnes has been agreed by congress......Maybe they're thinking...buy it all up, and set up our own global central bank, which is based on something which people understand has value. And not just a promise, which everyone knows has little...

is4fun
25-06-2009, 22:17
China abandon the dollar? Too funny! I would say over 90% of China's wealth depends on the dollar given they manufacture a majority of the world's products that were initially anchored in the US and Europe. LOL The country is trying to secure energy assets to fund its machine of production when demand will rise, and it will eventually, for a lot of cheap exploitable labor is the only thing the country has. Do you honestly think China is able to protect its interests abroad like say Africa? They are utilizing economic principles to sustain territorial integrity. This decade will be remembered for exactly that.

vladimir_seroff
26-06-2009, 02:18
... 90% of China's wealth depends on the dollar given they manufacture a majority of the world's products ...

Isn't that why they are trying to reduce the dependency?

It is ironic that the Communist Party of China, based on the article, has such a huge influence on the fate of the US dollar. What is next?

Scrat335
26-06-2009, 05:19
No China will not abandon the dollar in the near future.

If you loan someone a thousand dollars you own them. If you loan someone a million dollars, they own you.

America owns China for now.

vladimir_seroff
26-06-2009, 08:09
No China will not abandon the dollar in the near future.

If you loan someone a thousand dollars you own them. If you loan someone a million dollars, they own you.

America owns China for now.

Whatever makes you feel better.

The point is that according to the speech given by Mr. Li Lianzhong, China is no longer interested in the US Treasury bonds, and instead it will be concentrating on "energy and natural resource assets" and even on "land in the United States".

Even if the USA owns China, or even if the Moon owns China, the way I see it is that the US dollar will have to go down. Maybe it is a strong indicator that the USA owns China, or that the USA gave China the evil eye.

I am just the messenger - it is the Communist Party of China that calls the shots.

Kvartiraokhotnik
26-06-2009, 12:26
China alters gold synergy (http://www.usagold.com/amk/abcs-dragonshoard.html)

great article on China and gold.

vladimir_seroff
27-06-2009, 08:50
China alters gold synergy (http://www.usagold.com/amk/abcs-dragonshoard.html)

great article on China and gold.

Thank you for posting this. Good article.

I would agree that "... by elevating gold to prominence in its national reserves, China lays the groundwork for the yuan's future use as a prominent reserve currency."

The idea that "by becoming gold's most prominent champion, China mounts an aggressive defense of its domestic gold mining industry, and by proxy the rest of the industry as well" is also quite interesting.