Alright China, it’s time for you to stop talking down to us as though we’re total idiots.
Once again, top Chinese officials are slamming the dollar, saying it’s time for a new world currency, instead arguing (implausibly) for some king of IMF-based reserve currency. Given the nervousness about the US government’s debt, this rhetoric is taken seriously and they make for good stories (guilty).
But what’s really going on here?
China is trying to jawbone the dollar down, as a way of weakening the Yuan — which is of course linked to the dollar, against currencies like the Yen and the Euro.
There’s not going to be an IMF-based currency, and China doesn’t seem ready to abandon the dollar. Their best hope is that others get nervous, dump dollars, and as such fine Chinese exports to be cheaper than other competitors.
Before the financial crisis, the only role of the US treasury (it seemed) was to jawbone the dollar. Apparently, that’s the role of China’s bank, too.