[ad_1]
POSTED IN GGN
BY LUIS NASSIF
China’s geopolitical strategy and the launch of a digital sovereign currency will be the geopolitical event of the year.
A China Daily article details the strategy well.
Fact 1 – the disconnect between the financial market and the real economy in the US USA
- Oil is traded at negative prices.
- Unemployment in the United States is nine times higher than in the moments after the 2008 collapse.
3 Poor management of the Covid-19 crisis and a medical system that favors only the wealthy are causing 2,000 deaths per day.
Still, the North American stock market rose for 5 weeks, showing an impressive disconnect between economic reality and the financial market. A collapse in the price of oil was needed to awaken the American market.
Fact 2: the collapse of the American model.
Blocks are a deliberate hibernation of economic activity that forces a complete economic restructuring. They expose and kill companies that relied on credit because it drains cash flow. Many companies will not re-emerge from this hibernation.
In addition, the concentration of income, the lack of concern about employment has caused an impoverishment of the poor and middle classes in the United States. For this same reason, the potential for extreme contraction of the domestic market is great.
Fact 3 – Trump’s campaign to disconnect China.
The beginning was Missouri’s attempt to sue China, a publicity stunt because states cannot be prosecuted. But this approach by Trump profoundly alters trade and investment flows, but it will also have consequences for countries that want to continue doing business with China.
There, we have to analyze three relevant factors:
1. The dollar as a strong arm of the United States’ foreign policy.
The instrument of pressure would be the threat of excluding companies from the SIWFT dollar settlement system. These signals have already been issued by Trump. This was how he proceeded with the European companies that were negotiating with Iran, in accordance with the UN resolutions. The exclusion applies to all companies and not just companies with Iranians.
Similar sanctions have been applied to Venezuela and, more recently, the Australian government has been forced to abandon an agreement with Huawei to provide services to its new rail network, in part due to the difficulty of completing financial transfers.
2. Chinese action to combat the political use of the dollar.
The development of a RMB-based commercial settlement system is underway. The central point will be. Development of China’s sovereign digital currency, followed by regional adoption.
The first test has already been carried out in Shenzhen, Suzhou, Chengdu and Xiong’an. The currency was adopted in the monetary system, for the payment of parts of the wages of the government and state sectors starting this month.
The sovereign digital currency is an alternative to the dollar settlement system and mitigates the impact of sanctions or threats of exclusion from the SWIFT system.
According to the newspaper, the currency not only facilitates integration into globally traded currency markets, but also eliminates the risk of politically inspired riots.
The stability of the Chinese yuan during the COVID-19 crisis has increased its attractiveness to many investors. Consolidated, China’s digital sovereign could operate side by side with the dollar or, if necessary, be mutually exclusive.
3. Strengthening the Belt End Highway Initiative (BRI)
It is a global development strategy implemented in 2013 by the Chinese government, aimed at stimulating infrastructure investments in almost 70 countries and international organizations in Asia, Europe and Africa.
China’s logic echoes Nelson Rockefeller’s (failed) attempts in the 1940s for a New Deal for Latin America as a way to stimulate the economy on both sides.
According to the newspaper,
Economies driven to lift the poor out of poverty to develop a new class of consumers provide growing markets. Many have already adopted BRI and may be receptive to moving away from dependence on the dollar.
China prioritized the Silk Road in aid against COVID-19. And BRI remains a fundamental alternative to the post-COVID-19 economic structure.
All this is strengthened with the fall of the US domestic market. USA And the deliberate policy of isolation and disconnection of the USA. USA In relation to China.
The replacement and growth of markets within the BRI structure, coupled with freedom from the threat of dollar armaments in trade and liquidation, create a different structure of China’s global economic engagement.
The statesmen
Post-war modeling was due to the role of statesmen such as Franklin Delano Roosevelt (who died before the war ended), Winston Churchill, Charles De Gaule. In Brazil, changes in world geopolitics were taken advantage of by statesmen such as Getúlio Vargas, in the phase of establishing basic industry, and Juscelino Kubitscheck, in the phase of rebuilding Europe.
Now, while China is led by Xi Jinping, the United States is by Donald Trump and Brazil by Jair Bolsonaro. While Trump and Bolsonaro play with the sticks, China shows why it is the homeland of chess.
[ad_2]
