[Marxism] Soaring use of Chinese yuan to settle trades reflects its rapid economic rise

Ralph Johansen mdriscollrj at charter.net
Tue Sep 10 09:58:20 MDT 2013

Marv Gandall wrote

Trading in yuan has tripled in the past three years, the sharpest 
increase in a global currency market which has itself grown at nearly 
the same pace. The steadily appreciating yuan has encouraged its use by 
Chinese exporters and their overseas customers looking to escape 
transaction costs and foreign exchange currency risk. The use of other 
developing nation currencies like the Indian rupee, South African rand, 
and Brazilian real have also risen over the past decade but not as 
strikingly, and have recently taken a tumble on news the Federal Reserve 
will be reducing its support of the US bond market. China's more highly 
regulated economy has prevented similar destabilizing inflows and 
outflows of hot money tied to the movement of interest rates in the West.

The yuan's strength also helps explain why China has not to date joined 
India, South Africa, and Brazil in a coordinated central bank response 
to halt the plunge in developing market currencies (it echoes the 
neoliberal mantra in counselling "structural reform" of these economies 
instead) as well as the Chinese leadership's plan to establish a 
financial free trade zone in Shanghai as a further move towards 
"liberalizing" its financial account, potentially as important a 
development as the pilot project which opened the country's first 
special economic zone in Shenzhen to foreign manufacturers in 1979.
I have the impression that the currency used for payment is not 
particularly significant. What counts is what currency commodities are 
priced in, and that is not changing. Is this not accurate?

More information about the Marxism mailing list