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The dollar plummeted, the rise of the yuan!
The Chinese Yuan Rises Strongly, and the US Dollar Hegemony is About to Collapse!
Recently, there have been drastic fluctuations in the global financial market, with the US Dollar Index falling sharply while the Chinese Yuan has risen significantly, marking a major change between the Chinese and American markets overnight.
However, these changes seem to be sending a signal that the direction of the Chinese and American economies is reversing. So, what will the ultimate outcome be?
The End of US Dollar Hegemony
On August 5, 2024, Wall Street experienced a severe market shock, particularly for the technology companies known as the "US Stock Market's Seven Titans," which suffered a devastating blow.
On that day, the market value of these tech giants suddenly decreased by 1.3 trillion US dollars, causing widespread concern and anxiety in the market.
As soon as the news spread, the global market immediately fell into turmoil. Is this just an ordinary market fluctuation? The answer is obviously not that simple.
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At the core of this market storm, the continuous decline of the Japanese yen exchange rate in recent times, along with the strong measures taken by the Japanese government to sell US Treasury bonds to buy yen, played a significant role.
This move directly triggered a deep global reflection on the trajectory of US dollar hegemony. The yen defense war is by no means solely about the Japanese economy; it also reflects the turmoil and unease that the US dollar hegemony is experiencing.For a long time, the US dollar, as the world's primary reserve currency, has enjoyed stable economic benefits. They could simply start the printing press and effortlessly profit from global wealth.
However, this reliance on money printing has also sown significant risks. In recent years, the US economy has been plagued by structural imbalances and escalating debt issues. Coupled with the frequent wielding of financial sanctions, the credibility of the US dollar has been steadily declining.
Following the outbreak of the Russia-Ukraine conflict, the US froze Russia's overseas assets, turning the dollar hegemony into a "financial nuclear bomb."
This shortsighted approach of "killing a thousand enemies at the cost of eight hundred of our own" has prompted countries to reassess the reliability of the US dollar.
If the Russia-Ukraine conflict was a "check-up" for dollar hegemony, then the recent turmoil in the Middle East has laid bare the "ailments" of the US dollar.
Middle Eastern countries are significantly reducing their holdings of US debt and aggressively increasing their gold reserves, intensifying the trend of de-dollarization. This places unprecedented pressure on the dollar hegemony.
For a long time, Japan has been a "stalwart ally" of the US and holds a substantial amount of US debt. Under the pressure of the yen's depreciation, the Japanese government ultimately adopted a pragmatic strategy by selling US debt and buying yen to safeguard its economic interests.
This move, seemingly a response to Japan's economic predicament, actually reveals a waning confidence in the US dollar. After all, no one would stake their entire fortune on a gamble filled with uncertainty.
Japan's choice also provides a new perspective for other countries. When facing economic risks, instead of relying solely on the US dollar, it is better to adopt a more diversified strategy to protect their interests.
Thus, it can be seen that more countries will join the trend of "de-dollarization" in the future, further undermining the foundation of dollar hegemony.China-US Financial Rivalry
In this struggle to defend the hegemony of the US dollar, China is undoubtedly the United States' primary "adversary."
In recent years, to maintain its hegemonic status, the US has unhesitatingly launched a trade war against China and implemented a series of comprehensive measures such as technological blockades, with the intention of curbing China's development.
However, China has not been intimidated by these "small moves" but has persisted in deepening reform and opening up, promoting high-quality economic development, and actively participating in global governance, safeguarding the multilateral trade system, and demonstrating an increasingly powerful influence on the international stage.
The accelerated internationalization of the renminbi has put unprecedented pressure on the United States.
As a result, an increasing number of countries have begun to use the renminbi in international trade settlements, gradually making it another primary choice besides the US dollar.
Under the relentless pressure from the US, the China-US financial rivalry has entered a white-hot phase. The US frequently raises interest rates, attempting to alleviate its own economic difficulties by creating the illusion of "dollar repatriation."
However, this shortsighted measure not only fails to solve the US's own problems but may also drag the global economy into the abyss of recession.
In response to the US's actions, China has taken a series of measures to deal with external risks, stabilize the renminbi exchange rate, and has achieved significant results.
The resilience and vitality of China's economy, as well as the wisdom and capability of the Chinese government to respond to risks, have allowed the world to witness the strength of China and have made the US realize that attempting to suppress China through financial means is destined to be a futile effort.Of course, the financial game between China and the United States is not just a matter between the two countries; it is more about the future direction of the global financial order.
China-US Real Estate Market
The decline of the US dollar's hegemony is an inevitable trend in historical development, hence the world needs to establish a more diversified and inclusive international monetary system.
China will continue to play a constructive role, working with countries around the world to promote the establishment of a fairer, more just, and reasonable new international financial order, contributing Chinese wisdom and strength to the stable development of the global economy.
Against the backdrop of China-US financial competition, the real estate market has become an important field for both sides to contend.
The United States is well-versed in the essence of "financial warfare," attempting to replicate the strategy of "shearing the wool" from Japan after the "Plaza Accord," by manipulating financial leverage to create bubbles and then triggering the collapse of these bubbles to strike at China's economy.
In recent years, some international capital giants have frequently entered China's real estate market, acquiring high-quality assets at low prices, attempting to profit from fluctuations in the property market. Well-known real estate companies such as Wanda, Vanke, and Evergrande have all been targeted by international capital "sniping."
However, China has not followed the path they anticipated. The Chinese government has acted in a timely manner, introducing a series of regulatory policies to stabilize market expectations and prevent the bursting of real estate bubbles.
At the same time, China has actively promoted the transformation and upgrading of its economic structure, vigorously developing the real economy, reducing dependence on this industry, and completely shattering the United States' attempt to "short" China through the real estate market.
The stable development of China's real estate market has become an important "weathervane" in the economic competition between China and the United States. This indicates that China not only has the ability and confidence to safeguard its own economic security but can also effectively respond to various external challenges.The author believes that the yen defense battle is actually a manifestation of the decline of the US dollar's hegemony. With the in-depth development of world multipolarity and economic globalization, the era of the United States' dominance has become history. In the field of international finance, China will continue to play a constructive role, cooperate with countries to promote the development of the international monetary system towards a more diversified direction, and contribute to the stability and prosperity of the global economy.
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