Impact of China's rise in the world - Long term predictions (30-50 years)


Nobonita Barua

Senior Member
Registered Member
This is a good starting point to talk about.

It's bullshit that in order for yuan to become reserve currency, China will have to give up capital controls. The so called experts who advocate this usually have no idea what they're talking about or is trying to willfully mislead.

U.S dollar is the world's number one reserved currency. Yet, does America lack control of its own currency and exchange rate? Of course not! If the U.S had "given up capital control," they wouldn't be able to sanction anyone; they wouldn't be able to implement unlimited quantitative easing; or have such astronomical debt rate. Financial sovereignty is perhaps the most important right of a nation, and lack of it will contribute little to the yuan becoming a reserve currency.

How did America achieve and maintain reserve currency status? Two main reasons:
  1. War. After World War II, America gave Europe massive loans to rebuild the continent. This was the basis for the dollar becoming widely accepted. Today, America continues to enforce dollar hegemony through war as seen in Iraq and Libya (Saddam Hussein wanted to trade Iraqi oil in Euro; while Gadafi wanted to trade Libyan oil in gold).
  2. Ease of use of the Swift banking system. U.S Swift system further consolidates the dollar's acceptance and all banks today use it to handle transactions. There is currently no real alternative and America wants to keep it that way.
Therefore, for a currency to become a reserve currency, it just needs to be widely accepted and used around the world. China is in a unique position to achieve this because China is the largest trading nation in the world. All China needs to do is make it law that from now on, all trade transactions with a Chinese institution must be denominated and completed in Yuan. In other words, you want to buy Chinese goods? Pay in Yuan.

However, such a law will cause serious problems. First, it's not in China's style or interest to do this. For China, as the biggest advocate for multilateralism, making such a unilateral declaration will seriously harm China's image and damage international trust. Therefore, China must continue on the path of multilateral win-win co-operation and consensus building; China should not strive to become like America.

Secondly, America will surely react negatively as it did with Iraq and Libya. We can already see signs of the U.S manufacturing consent for a war with China, and China hasn't even done anything yet! For Iraq the story was Saddam had weapons of mass destruction and must be stopped, and we all know today that there was no WMD in Iraq. For Libya the story was Gadafi used chemical weapons on his own people; Nato intervened in Libya in 2011 and yet by 2016 they were still looking for chemical weapons "hidden in bases with which nobody was familiar, deep in the desert." I think in another 10 years we will find out that this is just another example of atrocity propaganda just like the Nayirah testimony. For China, the story is concentration camp in Xingjiang, forced slave labor, and forced abortion. Therefore, to achieve reserve currency status, China must also continue to modernize its military such that there is sufficient deterrence for an American invasion.

Thirdly, there is still no viable alternative to Swift banking. Currently yuan accounts for only about 2% of the world's currency exchange. Which means even if China mandates the use of Yuan, no one in the world has it and there's no way for China to easily distribute the Yuan around the world. Therefore, China's strategy will involve developing better alternatives to Swift banking. And this is where the digital blockchain Yuan comes in. Once developed, this will enable Chinese banks to give out loans directly to you or I on our phones. There would be no need to establish global banking branches, and transactions are safer and faster.

In conclusion, from this one aspect of attaining global reserve currency, China's future will be predominately about building multilateralism and win-win cooperation, increased military development, and financial sector reform within China with focus on digital currency. All these development will take time and I expect this to be the trend for the next 20-30 years.
I think this post explains everything.

I just want to add, broadly saying that USD is reserve currency because of so called "free flow" is totally bogus. People sometimes are too lazy to change to another system.

But with only payment booming,digital yuan will courage countries to make it reserve currency, especially if china can team up with countries like Iran to sell energy in yuan.
 

canniBUS

New Member
Registered Member
I think it is very likely China will see sustained economic development. It takes a very scientific approach towards development and has major development goals for 2050-2060 already mapped out with details in the process of being developed. These goals are not as simple as hitting GDP targets (which is no longer a main goal) as some think but are structural changes in society. As long as these reforms are continued, sustained growth is likely to be maintained. Current development is pretty much in line with with 'China Modernization Report 2005' from Chinese Academy of Sciences which maps out general societal goals until 2080.

My projection is 2021-2025 China will likely grow at around 5.5% lowering to 5% from 2025-2030, and 4% from 2030-2040, 3.5-4% 2040-2050. Nominal gdp will converge with PPP over time with a starting point of $15,000 in 2020, resulting in GDP of around $74-$78 trillion in current USD, per capita of $53,000-$56,000 and population of about 1.4 billion. Military expenditures would likely be around 1.5-2% of GDP (currently its at 1.3%), $1.1 trillion to $1.56 trillion. China's current regional inequalities would still be present into the future with coastal regions and major cities being well into the level of developed nations.

Pre 2007 EUs average l
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rate was 1.5%, currently half that around 0.7%. I think we will see it pick up in the future, baseline 1% growth would be $48,000 per capita and optimistic 1.5% would result in $55,000 per capita by 2050. China's average would be approximate to EU's per capita level by 2050.

US will likely maintain 2% long term labour productivity growth. By 2050 per capita gdp would be around $115,000, population 380 million and total gdp of $43 trillion. Military expenditures of 3.5% of gdp or $1.5 trillion. This is projections based on current trends. The unknown is how the US would deal with its debt and possible change in USD primacy. I still see the US being a very relevant player into the 21st century, as long as its able to maintain its technology lead and by in large be a global talent magnet. A budget crunch would be devastating for US government discretionary spending, half of which goes to the military. If the US is forced into such a situation, comprehensive national power would rapidly decline. US would want to avoid this situation at all costs. With the decline in the gap between US and China's military spending, US would be inclined to further integration and control of its allies. It would try to centralize resources of nations it has influence over in order to maintain primacy.
Labour productivity growth is a very interesting metric to look at. The legitimacy of capitalism comes from the competition that forces enterprises to cut labour costs by investing into labour saving technology. This leads to the growing abundance of commodities to satisfy human needs. However, I've read some studies showing that despite the massive proliferation of computers over the last 30-40 years the rate of growth of labour productivity is slowing down, your linked aritcle shows this as well. Is this a technological limit, a limit imposed by the irrationality of capitalism? Or will the promises of AI finally make computers as useful to productivity as we initially thought they would be? What ever the outcome, whoever can have the most productive labour will come out on top. However productivity and production should not be confused as the same thing. Labour needs to have the capacity to produce as much as possible but how much is actually produced needs to be balanced against environmental concerns. Of course, a system driven by maximizing profit will continue to ignore these concerns for as long as possible.
 

hullopilllw

Junior Member
Registered Member
I think this post explains everything.

I just want to add, broadly saying that USD is reserve currency because of so called "free flow" is totally bogus. People sometimes are too lazy to change to another system.

But with only payment booming,digital yuan will courage countries to make it reserve currency, especially if china can team up with countries like Iran to sell energy in yuan.

Attack is on. One day any nation that adopt DCEP as cross border payment platform will be sanctioned by the US.

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Nobonita Barua

Senior Member
Registered Member
Attack is on. One day any nation that adopt DCEP as cross border payment platform will be sanctioned by the US.

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Yea i have read that.


However i really hope in this case US goes ahead with sanctions. Normally sanctions work when there is no alternative of goods, business or payment system.
In this case US sanction will only take US out of equation. I don't mind that ;)
 

tamsen_ikard

Junior Member
Registered Member
This is a good starting point to talk about.

It's bullshit that in order for yuan to become reserve currency, China will have to give up capital controls. The so called experts who advocate this usually have no idea what they're talking about or is trying to willfully mislead.

U.S dollar is the world's number one reserved currency. Yet, does America lack control of its own currency and exchange rate? Of course not! If the U.S had "given up capital control," they wouldn't be able to sanction anyone; they wouldn't be able to implement unlimited quantitative easing; or have such astronomical debt rate. Financial sovereignty is perhaps the most important right of a nation, and lack of it will contribute little to the yuan becoming a reserve currency.

How did America achieve and maintain reserve currency status? Two main reasons:
  1. War. After World War II, America gave Europe massive loans to rebuild the continent. This was the basis for the dollar becoming widely accepted. Today, America continues to enforce dollar hegemony through war as seen in Iraq and Libya (Saddam Hussein wanted to
    Please, Log in or Register to view URLs content!
    ; while Gadafi wanted to
    Please, Log in or Register to view URLs content!
    ).
  2. Ease of use of the
    Please, Log in or Register to view URLs content!
    . U.S Swift system further consolidates the dollar's acceptance and all banks today use it to handle transactions. There is currently no real alternative and America wants to keep it that way.
Therefore, for a currency to become a reserve currency, it just needs to be widely accepted and used around the world. China is in a unique position to achieve this because China is the largest trading nation in the world. All China needs to do is make it law that from now on, all trade transactions with a Chinese institution must be denominated and completed in Yuan. In other words, you want to buy Chinese goods? Pay in Yuan.

However, such a law will cause serious problems. First, it's not in China's style or interest to do this. For China, as the biggest advocate for multilateralism, making such a unilateral declaration will seriously harm China's image and damage international trust. Therefore, China must continue on the path of multilateral win-win co-operation and consensus building; China should not strive to become like America.

Secondly, America will surely react negatively as it did with Iraq and Libya. We can already see signs of the U.S manufacturing consent for a war with China, and China hasn't even done anything yet! For Iraq the story was Saddam had
Please, Log in or Register to view URLs content!
and must be stopped, and we all know today that there was no WMD in Iraq. For Libya the story was Gadafi used
Please, Log in or Register to view URLs content!
on his own people; Nato intervened in Libya in 2011 and yet by 2016 they were still looking for chemical weapons
Please, Log in or Register to view URLs content!
I think in another 10 years we will find out that this is just another example of atrocity propaganda just like the
Please, Log in or Register to view URLs content!
. For China, the story is concentration camp in Xingjiang, forced slave labor, and forced abortion. Therefore, to achieve reserve currency status, China must also continue to modernize its military such that there is sufficient deterrence for an American invasion.

Thirdly, there is still no viable alternative to Swift banking. Currently yuan accounts for only about
Please, Log in or Register to view URLs content!
. Which means even if China mandates the use of Yuan, no one in the world has it and there's no way for China to easily distribute the Yuan around the world. Therefore, China's strategy will involve developing better alternatives to Swift banking. And this is where the digital blockchain Yuan comes in. Once developed, this will enable Chinese banks to give out loans directly to you or I on our phones. There would be no need to establish global banking branches, and transactions are safer and faster.

In conclusion, from this one aspect of attaining global reserve currency, China's future will be predominately about building multilateralism and win-win cooperation, increased military development, and financial sector reform within China with focus on digital currency. All these development will take time and I expect this to be the trend for the next 20-30 years.



I think your opinion about Yuan and currencies in general is not well-informed. You need read up on Economics and understand these details properly. I don't know if you know or not, The Yuan is not a convertible currency. What does it mean, you cannot buy or sell yuan in an open market outside China.

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This is the way, China control the value of the Yuan and typical laws supply and demand do not really apply.

That is not how US dollar works for example. You can openly buy and sell US dollar notes with anyone without any involvement of the US government.

There is an impossible trinity in monetary policy.
The impossible trinity states that you can only have 2 of the following 3:

  • A fixed exchange rate
  • Free capital movement (i.e. free convertibility of currency)
  • An independent monetary policy
US dollar does not have fixed exchange rate and it varies due to supply and demand. That is not the case for Yuan where the value of the Yuan is fixed by Chinese govt. They also want to maintain their monetary policy powers. Thus, they have to maintain capital controls including not allowing open buying and selling of Yuan.


BTW, I should also mention that US govt cannot stop anyone from buying and selling in US dollars. How their sanction works is that they threaten banks with fines, and all banks that buy and sell US dollars must maintain a bank account with the US Fed since the Fed is the creator of the Dollar. They have the final Ledger if you will. So, they can create or erase how much dollar there is by simple adding or removing Dollar from the Ledger. All central banks issuing a currency have this power. So US is not unique in this regard.

The Banks voluntarily follow US law to avoid getting cutoff from the Fed Bank account. Which means they follow US sanctions. It has nothing to do US maintaining a Capital control.
 
Last edited:

boytoy

New Member
Registered Member
you cannot buy or sell yuan in an open market outside China.
Wrong. Yes you can. You just can't buy/sell it at favourable rates. I just tried buying Yuan with my bank in Canada couple months ago, the rates are horrible.

This is the way, China control the value of the Yuan and typical laws supply and demand do not really apply.
Wrong again. In fact, China controls the value of Yuan through law of supply and demand. If you want to devalue the Yuan, print more of it, if you want it's value to rise, print less relative to other countries. This is the only way to control value of a currency. If not then how do you suppose China controls Yuan's value?

There is an impossible trinity in monetary policy.
Again, having a freely convertible currency is not a prerequisite for reserve currency status. The main determinant is wide acceptance and use.

US dollar does not have fixed exchange rate and it varies due to supply and demand.
Yes, but the U.S government can certainly control the dollar's exchange rate by adding and removing dollars from the "ledger." In fact that's exactly what they did in response to the 2008 crash: Let China hold U.S debt in dollars, then print more dollars so the value that U.S has to pay back is less than what they borrowed.

Thus, they have to maintain capital controls including not allowing open buying and selling of Yuan.
Wrong again. If Chinese people can't buy and sell Yuan then how do they study and live abroad? Only the amount exchanged is limited, and it might take a week or two cause it requires government oversight.

The Banks voluntarily follow US law to avoid getting cutoff from the Fed Bank account. Which means they follow US sanctions. It has nothing to do US maintaining a Capital control.
If U.S government forcing the banks to "voluntarily follow U.S law" is not a form of capital control. Then, what do you mean by capital control then?
 

Volpler11

Just Hatched
Registered Member
On the intellectual property front china should be adapting higher level of protection like thr us because now china will have more ip to protect. Currently the level of awareness of ip is still lower than us and eu.
 

solarz

Brigadier
My predictions:
  • Chinese culture will become global. Chinese period and wuxia dramas will become internationally renowned. Chinese film and game industries will eclipse their American counterparts.
  • African countries will become the fastest growing economies. We're already starting to see signs of this.
  • Japan and South Korea will reorient into the sinosphere. Korean unification will start looking optimistic again.
  • Taiwan reunification will have been achieved around 2030-2040.
  • SCS issues will be resolved, China will have a powerful military presence entrenched in the area.
  • Establishment of a Chinese Monroe doctrine. US military bases in South Korea and Japan are removed. US pacific fleet falls back to Australia and Guam. Possible proxy war between US and China in one of the ASEAN nations having taken place during this process, with the Chinese supported faction emerging victorious.
 

SimaQian

Junior Member
Registered Member
I am opening this discussion to talk about the impact of China's rise and the likely reduction of dominance of US and Europe in the world. I would like to see a long term perspective in this analysis in the range of 30-50 years.

What I would like to know is. Where do you see China in 30-40 years from now in 2050-2060. How much wealthy, influential and militarily powerful do you think China will be?

What impact do you think China's rise will bring to the world and how would the world look different from what it is right now?

How would this effect on the power and standing of US and Europe? Would they lose their financial power of sanctions that they wield all over the world? How about their military power? Would there be any change on how their force is positioned now? Would they change their behavior in terms of using force to achieve goals? Would they become more hesitant or more aggressive in using force?

What about the wealth and power of the west in general? Would US and Europe become poorer due to China's rise? China's higher level of technology and education could create a big competition for US and Europe and Japan. Would they lose their market share and thus become poorer due to China?

Then the bigger question comes, Would the West accept China's rise? How would they behave to stop, contain, curtail or accept China's rise and the likely reduction of their dominance in world affairs.

How much effort are they willing to spend to stop China's rise in a long term perspective? If China say, surpasses US by 2030, would they become even more concerned and aggressive about containing China's growth? Or would they become demoralized and accepting?

How likely is full scale decoupling between China and US? How willing is Europe to do a decoupling in say 2030-2040 when China will be much bigger in power and influence?

How about Japan and Korea? Are they willing to accept a rich and powerful China at their doorstep? How would they behave to these changes?

Finally, how about other developing countries around the world? Would they welcome a China that is more powerful than US? How would the behavior of countries like Iran, Saudi Arabia, Thailand and Venezuela is likely to change due to this transformation?

Finally, how likely is hot war to stop China's rise and where would that hot war occur and who might be the participants? Would this be a proxy war similar to the Cold War? OR would we see actual naval and air battle between say forces of China and US?

As you can see, there are many many open questions. These topics also touch on economics, IR, political science and military topics.

I hope you can keep the discussion here long term with a horizon of 30-50 years.
Unrealistic topic and timeframe. Anything can happen in 30 years plus. It doesnt matter what you put there. None of us will check this after 30 years. If the time frame is shorten to 1 or 2 to 4 years, it is more realistic and measurable.
 

kentchang

Junior Member
Registered Member
Wrong. Yes you can. You just can't buy/sell it at favourable rates. I just tried buying Yuan with my bank in Canada couple months ago, the rates are horrible.


Wrong again. In fact, China controls the value of Yuan through law of supply and demand. If you want to devalue the Yuan, print more of it, if you want it's value to rise, print less relative to other countries. This is the only way to control value of a currency. If not then how do you suppose China controls Yuan's value?


Again, having a freely convertible currency is not a prerequisite for reserve currency status. The main determinant is wide acceptance and use.


Yes, but the U.S government can certainly control the dollar's exchange rate by adding and removing dollars from the "ledger." In fact that's exactly what they did in response to the 2008 crash: Let China hold U.S debt in dollars, then print more dollars so the value that U.S has to pay back is less than what they borrowed.


Wrong again. If Chinese people can't buy and sell Yuan then how do they study and live abroad? Only the amount exchanged is limited, and it might take a week or two cause it requires government oversight.


If U.S government forcing the banks to "voluntarily follow U.S law" is not a form of capital control. Then, what do you mean by capital control then?

I completely agree with the previous posting that you lack the most basic understanding. Since it seems you feel you know something while adults think otherwise, it is pointless to correct you.
 

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