SPIEGELONLINE INTERNATIONAL: Skeptics have dismissed Beijing's talk of de-emphasizing the US dollar, but China is making moves that could soon lead to a convertible yuan.
Are the Chinese finally getting serious about loosening their ties to the dollar -- and even replacing the greenback with the yuan as the global economy's reserve currency? The evidence is mounting that they are.
For the last two months, China's leadership has been complaining about the country's dangerous dependence on the dollar.. Beijing holds $2 trillion (€1.43 trillion) in dollar assets, accumulated through years of exports to America and massive purchases of Treasuries by the Chinese government. If Washington can't rein in its mounting budget deficit, both Treasuries and the greenback could weaken considerably -- and the Chinese could be big losers as a result.
The Chinese began generating attention on the issue in March, when Chinese Premier Wen Jiabao said he was worried that the country's dollar assets could slide. Ten days later Chinese central bank chief Zhou Xiaochuan suggested replacing the dollar as the international reserve currency. One idea, Zhou said, was to replace the dollar with a basket of currencies supervised by the International Monetary Fund. >>> © SPIEGEL ONLINE 2009 | Tuesday, May 26, 2009
LeVine is a correspondent in BusinessWeek's Washington bureau.