I am not judging here; this is what Superpowers do. Having the largest economies, and thus, the most disperse global interests, Superpowers have a need to maintain those interests, and to play the "world's police" to ensure global trade. Bottom line: a Superpower has the most skin in the game and needs to exercise its power to maintain both its national security, and the smooth functioning of the global economy. People may disagree with the methods, but the goals, I think are obvious.
But the post WWII era has ended, and so too, the post USSR era. But a new development has been taking place: we now have China rising as a Superpower in its own right. And with that rise, China's interests in Asia, as well as the rest of the world, are also rising. And so, China will increasingly find itself protecting these interests and as a result, will also find itself in conflict with the existing Superpower paradigm: the USA, and US Dollar dominance.
Recently the IMF said the SDR should replace the US Dollar's dominance. This is desperate appeasement, in my view. It is hollow. The SDR is a global "virtual" currency representing the US Dollar, the Yen, the Pound Sterling, and the Euro. Other nations are left out, but promises that they will be included are being made.
It seems to me that China is having none of this. At the end of the day, geopolitics and protecting one's interests is what matters, and a global currency that represents the Western world plus Japan, in my view, can never successfully accommodate the Chinese yuan. China and the US have increasingly competing interests, and the SDR approach, I believe will be a failure. Furthermore, the four main currencies of the SDR, representing the US, the UK, Japan, and the Euro, are increasingly "basketcases" that also represent highly indebted countries with enormous social welfare programs that are either unfunded, or will need currency depreciation to fund. How can the SDR, a global currency, function when the underlying currencies are highly volatile?
As for China's view, to further prove my point, a Chinese Party Magazine recently stated:
"Peace in China Not Gained by Giving in, only Through War." The article that mentions this story is from "The Asian Age." I do not have access to the original article, and so, I will quote from the cited article I found. Here it is, emphasis mine:
From The Asian Age:
Terming US attempts to woo India and other neighbours of China as "unbearable," an article in a Communist Party magazine has said that Beijing must send a "clear signal" to these countries that it is ready to go to war to safeguard its national interests.
The article published in the Qiushi Journal, the official publication of the ruling Communist Party of China (CPC) said China must adhere to a basic strategic principle of not initiating war but being ready to counterattack.
"We must send a clear signal to our neighbouring countries that we don't fear war, and we are prepared at any time to go to war to safeguard our national interests," the article said, suggesting an aggressive strategy to counter emerging US alliances in the region.
"Throughout the history of the new China (since 1949), peace in China has never been gained by giving in, only through war. Safeguarding national interests is never achieved by mere negotiations, but by war," it said.The article continues, quoting the original source:
"What is especially unbearable is how the US blatantly encourages China's neighbouring countries to go against China. We cannot completely blame the US, as flies do not stare at seamless eggs.
"They are attempting to gain benefits by using US," it said.
It suggested that China should use its economic clout and trade as a weapon to rein in neighbours.
"China's neighbouring countries need China's international trade more than China needs them, with the vast majority of China's trade deficit caused by these countries," it said.
"Therefore, they, but not China, will suffer greater damage by antagonising China. China should make good use of these economic advantages and strategic power. This is also the most effective means to avoid a war," it said.And this is where it seems that the Chinese Red Army may one day be "visiting" other countries, US style:
China on its part, it said, can consider the idea of launching economic warfare through strategies to contain the US dollar and making effective use of forums like the IMF and initiating a space war by developing strong space weapons.
It also suggested as a counter-strategy the idea of pursuing a strong policy against neighbours joining the US alliance, even attacking a nearby enemy and forming anti-US alliances in Latin America and Africa.And then, there is economic warfare, with the US Dollar as the target:
So in view of this China should "pick up courage" and go for aggressive buying of other currencies, including the Indian Rupee hence taking the lead in affecting the market for US dollars.
This approach, it said, is market-driven and it will not be able to easily blame China.
"Of course, the most important condition is still that China must have enough courage to challenge the US currency. China can act in one of two ways. One is to sell US dollar reserves, and the second is not to buy US dollars for a certain period of time," which will weaken the currency and cause deep economic crisis for Washington.
Given the fact that China is the biggest buyer of US debt, its actions will have a demonstrable effect on the market.
"If China stops buying, other countries will pay close attention and are very likely to follow. Once the printed excess dollars cannot be sold, the depreciation of the dollar will accelerate and the impact on Americans wealth will be enormous.
"The US will not be able to withstand this pressure and will curtail the printing of US currency," it said.SOURCE
The world is becoming more and more fragile, as we are witnessing the end of the post cold war paradigm, and a new emerging paradigm seeks to replace it. We have to contend with not only a financial and currency crisis, but a crisis of world leadership and resource control. Such periods in history involve global upheaval and currency re-alignments. I don't rule out this article serving another purpose, that is, to serve as a bargaining chip of sorts that may influence the Yuan's portion of the SDR. But in a world of increasingly multipolarity and spheres of influence, I think they mean it. And history shows us that world dominance and currency dominance is usually fought for, not peacefully transitioned.