In consequence to the economical ignorance of Neon24, about the nickname “No Nick”. Concise version.
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Kika a day ago, in a discussion under the thread “Digital Ruble” by D. Kosiur, an anonymous 1 about the nickname “No Nick” he was kind adequate to compose to my address:
“ I mean, in your opinion, that yuan does not belong to the basket of SDR currencies and so is not a planet currency?(...)I see that you are much better than him as an economical analyst, as a financial analyst, as a digital currency specialist, etc., etc. I congratulate the versatility of knowledge!
Although your achievements in politics are rather mediocre and your ambitions are. In a word, you're an expert on everything but nothing..’
I wrote an anonymous “No Nick” : ” Dear ignorance, I believe, and this is in line with reality – yuan is not a planet currency.‘
To justify my view I mention 1 of the concise opinions from Russian sources, and I do so due to the fact that “without a nickname” besides builds a fiction about the alleged dollar strategy breach by ” sovereign economical cooperation between China and Russia” (this is what I call, in my present form, the slow economical colonization of Russia by China).
PZmore
Is yuan an alternate to the dollar and the euro?
In fresh years, real information madness around Chinese yuan can be observed in the Russian financial and economical agenda. Yuan is advertised as a viable alternate to the dollar and the euro and an attractive investment currency. Many Russian banks already offer deposits in yuan. Let's effort objectively to measure whether yuan truly is an alternate to a dollar?
In the last decade, any strengthening of the yuan's position on planet markets can be observed. However, this does not mean that the yuan will now replace the dollar or the euro. It would be more accurate to say this: previously yuan was not at all, now it is, but inactive in very tiny shares, inferior not only to the dollar and the euro, but besides to another leading planet currencies: English pound, Swiss franc, nipponese yen. Let's go to numbers.
World reserves
The share of yuan in planet reserves is 2.7%. The dollar share is over 60% (22 times more), the euro is over 20%. Juan ranks sixth in the ranking of planet reserve currencies. At the same time, there is an crucial point: about a 4th of all planet yuan reserves are concentrated in Russia. Russia uses yuan as a protection against geopolitical threats, given the specificity of its policy, but it does not make any financial or economical sense.
International payments
The share of yuan in global payments is 3.2%. Juan did not scope this level until 2022, previously this share was little than 3%. In this ranking, Chinese yuan by various sources occupy 4-5 positions. By comparison, the dollar share is about 40% (12.5 times more), the euro share is about 36.5%.
Chinese economy
The Chinese economy ranks 2nd worldwide in terms of GDP and 1st worldwide in terms of GDP in terms of PPPs. China is the leader of planet trade – 1st in export volume and 2nd in import volume. However, all these exports (as well as imports) are mainly made in dollars and euro alternatively than in yuan. As this is more cost-effective for China itself: by regulating the yuan course, they can adjust their balance of payments, their budget in the right direction (more later).
Inflation in China
Inflation in China takes place in different directions and is frequently contrary to planet trends (which is the consequence of advanced levels of government regulation of the economy). For example, in 2020, it accelerated by more than 20% and fell to 1.5% at the end of 2021. In the case of dollar and euro inflation, the situation is reversed.
Yuan as currency
Chinese yuan is not a freely exchangeable currency and that is its key difference with the dollar, the euro and another planet currencies. The yuan course is managed by the People's Bank of China rather rigorously: if necessary, it increases and, if necessary, decreases. If we look at graphs of yuan in relation to another currencies, in short periods of time we will see a gradual alternatively than smooth movement – this is simply a clear confirmation of the work of NBK.
Once again, the crucial difference is that the yuan exchange rate changes not by marketplace methods (as is the case with the dollar, the euro and another currencies) but by administrative methods (e.g. as is presently the case with the ruble ).
In the long term, there is no clear trend of weakening or strengthening the yuan: its course moves in a corridor "there and back" within 15-20%, from the advanced limit to the lower.
This is, for example, the dollar to yuan illustration over the last 5 years.
This suggests that China does not benefit from strong or weak yuan (which would have a negative impact on exports and imports respectively). Therefore, NBCh administratively maintains its course within certain limits. For example, now the yuan has approached the "strong" border, which means that in the future NBCh will most likely weaken it. In 2020, it was the opposite.
Given all this, I would definitely not consider yuan an alternate to the dollar and the euro. At the moment, it is mostly a local currency of a given country, although economically strong, but does not play a large function as a currency of global reserves or global payments. With yuan you can't go to any country in the planet and usage them there, unlike dollars and euros. Even in Russia, it is improbable that it will be possible to make purchases for yuan (but it is possible for dollars and euros).
for: https://dzen.ru/a/YlpbxnU2Pm-ZdSmq Text of 16 April 2022
