usa.chinadaily.com.cn
US Tariffs Risk Global Recession, Boosting Yuan
The United States' new tariffs, potentially triggering a global recession, are inadvertently strengthening alternative currencies such as the Chinese yuan, according to experts, who warn of a repeat of the 1930s Great Depression.
- How does the US's current tariff policy compare to historical precedents, and what are the potential long-term consequences?
- The US tariff policy mirrors the 1930 Smoot-Hawley Act, which triggered retaliatory tariffs, causing global trade collapse and worsening the Great Depression. This parallels current concerns about a global trade war slowing economic growth and potentially causing a similar economic downturn. China is actively promoting its yuan as a global currency, capitalizing on the dollar's weakening position.
- What are the immediate economic consequences of the US's new tariffs, and how might they impact the global currency landscape?
- The US's new tariffs, disrupting global trade and increasing recession risks, may unintentionally boost alternative currencies like the Chinese yuan. Economists predict the tariffs will tighten global dollar liquidity, weakening the dollar's international standing and potentially undermining its reserve status. This is evidenced by the US dollar index falling 4.94 percent since the beginning of the year.
- What steps is China taking to promote the internationalization of its currency, and what are the potential challenges and opportunities?
- China's efforts to internationalize the renminbi are gaining momentum due to the weakening dollar. These efforts include increasing the yuan's role in global commodity pricing and settlement, offering more yuan-denominated assets to foreign investors, and developing cross-border payment systems like the Cross-border Interbank Payment System and Project mBridge. The success of these efforts will significantly depend on China's macroeconomic policies and the stability of the yuan.
Cognitive Concepts
Framing Bias
The headline and opening paragraphs immediately highlight the potential for alternative currencies to rise in response to US tariffs. This sets a framing that emphasizes the negative consequences of US policy and the potential success of the renminbi. While quotes from experts are included, the overall narrative emphasizes the negative impacts of US tariffs and the potential benefits of the renminbi.
Language Bias
The language used is generally neutral, though words and phrases such as "retrogressive actions," "damage the international economic governance order," and "weakening the dollar's international standing" carry negative connotations. More neutral phrasing might include describing the tariff actions as "significant," "having potential economic consequences," or "altering the global economic landscape." The reference to some US allies "voting with their feet" is loaded, suggesting disapproval.
Bias by Omission
The article focuses heavily on the potential rise of the renminbi and its implications for the global economic order, potentially omitting other currencies or alternative scenarios. While acknowledging the US economic slowdown and potential recession, it doesn't delve into other contributing factors beyond US tariffs. The article also lacks perspectives from US economists or policymakers on the potential impacts of these tariffs.
False Dichotomy
The article presents a somewhat simplistic eitheor scenario: either the dollar maintains dominance or the renminbi rises significantly. It overlooks the possibility of other currencies gaining traction or a more nuanced shift in the global monetary landscape. The comparison to the Smoot-Hawley Act, while relevant, might oversimplify the current situation and its potential outcomes.
Sustainable Development Goals
The article discusses the potential negative impacts of US tariffs on global trade, economic growth, and the stability of the US dollar. These actions could lead to a global recession, impacting employment and economic prosperity worldwide. The potential for a global trade war, mirroring the events of the 1930s, further underscores the severe risks to global economic stability and decent work.