europe.chinadaily.com.cn
US Tariffs Risk Boosting Renminbi as Dollar Weakens
The United States' new tariffs, raising recession risks and disrupting global trade, may unintentionally boost alternative currencies like the Chinese renminbi, as economists warn of reduced US dollar liquidity and a weakening dollar index (down 4.94 percent year-to-date).
- How will the US's new tariffs impact the global currency landscape and specifically the international standing of the US dollar?
- The US's new tariffs, disrupting global trade and raising recession risks, may inadvertently strengthen alternative currencies like the Chinese renminbi. Economists predict tighter global dollar liquidity due to reduced US trade deficits, weakening the dollar's international standing. This is evidenced by the US dollar index falling 4.94 percent since the start of the year.
- What are the potential consequences of the US tariff policy on global economic growth, and how might it affect the role of the renminbi?
- The decline in the dollar's value is linked to the US's tariff policy, which mirrors the 1930 Smoot-Hawley Tariff Act's impact. Experts warn that escalating trade wars could slow global growth and potentially trigger a repeat of the Great Depression. China is using this opportunity to promote the renminbi's internationalization, focusing on increased yuan usage for global commodity pricing and offering yuan-denominated assets.
- What strategies is China employing to promote the internationalization of the renminbi, and what are the key challenges and opportunities for the yuan in the changing global financial system?
- China's strategic push to internationalize the renminbi is gaining momentum as the US dollar weakens. The development of cross-border payment systems like the Cross-border Interbank Payment System and Project mBridge, facilitating digital yuan transactions, is crucial to this effort. The long-term success of the renminbi will depend on China's macroeconomic policy responses and the central bank's ability to maintain yuan stability.
Cognitive Concepts
Framing Bias
The headline and introductory paragraphs strongly suggest that the US tariff policy is the primary driver of the potential shift away from the dollar. While this is a significant factor, the article presents this as almost inevitable, potentially downplaying other contributing economic and political factors. The repeated emphasis on the renminbi's potential rise reinforces this framing.
Language Bias
The language used is generally neutral, but phrases like "retrogressive actions" and "damage the international economic governance order" carry negative connotations towards the US policies. More neutral alternatives might include "recent policy changes" and "impact the international economic governance order." The consistent description of the potential decline of the dollar and rise of the renminbi as a near certainty, also shows a subtle bias.
Bias by Omission
The article focuses heavily on the potential rise of the renminbi and the decline of the dollar, but omits discussion of other potential international currencies that might benefit from a weakened dollar. It also doesn't explore alternative solutions to the trade issues at hand, beyond the rise of the renminbi. The perspectives of businesses and consumers directly affected by the tariffs are largely absent.
False Dichotomy
The article presents a somewhat simplistic eitheor scenario: either the dollar maintains its dominance, or the renminbi rises significantly. It doesn't adequately consider the possibility of a more complex outcome, such as a multi-polar currency system or the rise of other currencies.
Gender Bias
The article features several male experts (Guan Tao and Zhang Ming), but doesn't include any female perspectives. While not inherently biased, the lack of gender diversity limits the breadth of viewpoints presented.
Sustainable Development Goals
The article discusses how US tariffs negatively impact global trade, potentially triggering a recession and harming economic growth worldwide. Increased tariffs lead to trade wars, harming businesses and causing job losses. The potential for a global economic slowdown, even a repeat of the Great Depression, directly threatens decent work and economic growth globally.