Is not the balloon flying over the US. It is perhaps inconsequential. The real aggression as we have all seen is in the banks.
There is a group of people who want to curtail Chinese aggression.
They think that the useless balloon flying over the US is a symbol of that aggression. Every major nation has satellites taking millions of pictures of all kinds of military installations, a balloon is going to make a major difference, is it?
Others think TikTok collecting data is a huge issue. The hypocrisy of this argument is criminal. The American social network working in cahoots with the CIA probably mine an order of magnitude greater. They just don’t want to be fed the same medicine.
Also incredible hypocrisy.
But there is a form of aggression that China is engaging in which has been enabled by the west. It is going to hurt in ways that would be impossible to overcome.
When the Ukraine war started, what was the weapon of choice for the west? The Banking system.
That system seems to be crumbling by the day. Deutsche Bank might be the next to seek a bailout. The governments have wisened since the 2008 meltdown and seem to be addressing the banks one at a time.
The power underlying the banking system is currency. The power of their currency allows them to bail out without hurt.
In the next 3 months or so, you will start hearing the term Debt Ceiling thrown about a lot. The Democrats will blame the Republicans and vice-versa. Then an 11th-hour deal will be struck and things will go on. The refusal of the American government to tax the rich means that they need to keep printing currency and issuing bonds to cover the expenditure of the government.
The truth is America can afford to do this infinitely. Today. But perhaps not tomorrow.
China is taking aim squarely at this power. America provided Russia with enough reason to want this hegemony broken when they weaponised the banking system.
The two world leaders signed 14 economic agreements on March 21, covering everything from scientific cooperation to joint production of television programs, as they look to counterbalance the US dollar’s worldwide dominance.
In a joint statement announcing the agreements, China and Russia said their alliance was not “confrontational in nature and...not directed against third countries.” The leaders also called for an “acceleration of the process of establishing a multipolar world order.”
Putin specifically mentioned the Chinese currency in the context of Russian investments in the developing world.
“We are in favor of using the Chinese yuan for settlements between Russia and the countries of Asia, Africa, and Latin America,” Putin said. “I am confident that these forms of settlement in yuan will develop between Russian partners and their counterparts in third countries.”
That is not one beleaguered country seeking to move to Yuan but one of the largest exporters of oil moving to Yuan. China has the US to thank for this change of heart.
Not to mention, half the developing world is indebted to China in one way or another and this debt will have to be paid in Yuan. What the chart above does not show is the $1 Trillion US Bonds that China holds and can call at any time. If you leave out the “west” the only major countries not under Chinese debts are India and Saudi Arabia.
With a grandiose diplomatic flourish China brokered a rapprochement between Saudi Arabia and Iran, in the process upending US calculus in the Gulf and beyond.
While the United States has angered its Gulf allies by apparently dithering over morality, curbing arms supplies and chilling relations, Saudi Arabia’s King-in-waiting Crown Prince Mohammed bin Salman, known as MBS, has found a kindred spirit in China’s leader Xi Jinping.
Both are bold, assertive, willing to take risks and seemingly share unsated ambition.
One of the biggest oil buyers from the Kingdom of Saudi Arabia is China. They have been pushing hard to have this trade switched to Yuan. Brokering the deal provides them with soft power in the region. The actions of Mohammed Bin Salman have been questioned by America which he has not appreciated. It is a matter of time before the Saudis agree to trade in Yuan.
There is the argument that Yuan is not convertible and therefore is going to dominate the globe. To put it in layman's terms - China allows limited trading of Yuan. They have not offloaded the currency completely to the market so the market is able to determine the price of the currency. The currency has limited convertibility.
Here is the question. Which economy in the world would function in the absence of energy? Despite all of the grandstanding about renewables, oil consumption has only gone up in 2022 and is expected to go further up in 2023. The belief that we switching our sources of energy is a subterfuge propagated by the classification of gas as green energy and other such manipulation.
Almost 50% of the oil in the world comes from the Middle East and Russia. If they choose to switch to the Yuan, the rest will have to at least partially move to trade in Yuan. It does not matter if the currency is convertible or not.
Without Dollar supremacy, issuing debt the way America has been would become rather difficult. If that happens, I am sure the US would like the US dollar not to be fully convertible!
This is a long game. It is being played and the undercurrents are taking effect. While on the surface it might be calm, there is a torrent unleashing under the surface.
This is a game of currency hegemony.
The currency that is most used to buy goods will have the most power. So where will the rich want to park their money? Can China create circumstances where Yuan is the way to go?