Trusting China (Part 1)

At a recent investment forum, the topic of the prospect of a U.S. Dollar losing its reserve currency status was raised.

Consensus pointed at the Chinese Yuan (Renminbi) taking over that mantle over varying range of timeframes.

But when I asked the gathering would they buy the Chinese currency once it becomes the world’s reserve currency, the majority of answers featured the response ’No’ and “I don’t trust the Chinese’.

But I thought,

we have been happy purchase products manufactured in China, for low competitive prices.

In fact, we probably aren’t aware how many Chinese made items we actually consume or utilise, ironically mostly commissioned/ordered by Western corporations.

And we are equally happy for ’the Chinese’ to buy the goods or assets which ’the West’ wants to sell to them.

After all, China flirts with Japan as being the largest owner of U.S. Government Bonds.

So, I pondered the hypocrisy of ‘westerners’.

The thing is…..we will need to, at some point ’trust the Chinese’

Interestingly, JP Morgan Chase CEO, Mr Jamie Dimon (in the recent Senate Banking Committee Hearings) said that Chinese banks will be the prominent competition for the American banking industry in the next 30 years.

<end of Part 1>

May 31, 2021
by Rob Zdravevski
rob@karriasset.com.au