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The escalating trade war between the United States and China, with the Trump administration considering $100 billion in punitive tariffs in response to China’s $50 billion in retaliatory tariffs, obscures a more important source of conflict: China’s desire to someday establish the yuan as a global reserve currency, on a par with the dollar.
The dollar’s status is inextricably linked to international trade. Because the dollar reigns supreme in the trading system, other countries need to accumulate dollars. Most international trade is conducted using the dollar, even if the United States is not a party to the transaction.
The United States wasn’t always so dominant. After the 1971 decision to end the link between the value of the dollar and gold reserves, the dollar became a currency much like any other. But in 1974, the United States and Saudi Arabia struck an agreement in which the Saudis and the other Gulf states supported the dollar as the primary medium of exchange for oil exports. Thus, oil and other commodities are priced in dollars, so any country that buys oil must build up its dollar reserves to pay for it — mostly by exporting its goods and services so that it can receive dollars as payment.
Once established as a global reserve currency, the dollar has been kept strong by sustained demand for it, and a strong dollar makes American exports expensive to the rest of the world. American exports decline, imports increase, and a result is the trade deficit. Testifying before Congress in 1960, the economist Robert Triffin observed that the dollar’s global reserve status depends on the willingness of the United States to run trade deficits. This relationship, known as Triffin’s Dilemma, doesn’t always hold true (other countries have had reserve currencies and a trade surplus), but the American trade deficit with China, $375.2 billion last year, offers perhaps the best example of how a strong currency and trade deficits are connected.
Still, there are enormous benefits to being able to print paper money and have the world treat it as if it were gold. Other countries need American dollars, and they are willing to pay a premium to hold them. Valery Giscard d’Estaing, finance minister of France from 1962 to 1966, called this an “exorbitant privilege.” Once they have amassed those all-important dollars, countries use them to buy United States Treasury bonds. (China alone held $1.2 trillion dollars of United States government debt at the end of 2017.) This enormous global demand for American debt means that the United States can borrow at relatively low interest rates, financing its budget deficits away.
尽管如此，能够印刷纸币并让全世界把它当作黄金对待，这是有巨大好处的。其他国家需要美元，他们愿意支付高价来持有它们。1962年至1966年，法国财政部长瓦勒里·季斯卡·德斯坦(Valery Giscard d’Estaing)认为这是一种“过分的特权”。其他国家一旦积累起大量至关重要的美元，就会拿来购买美国国债。（截至2017年底，仅中国就拥有1.2万亿美元的美国国债。）全球对美国国债的巨大需求意味着美国可以以相对较低的利率借款，为其预算赤字融资。
The “exorbitant privilege” extends to ordinary Americans, who have access to a vast supply of credit and can borrow to buy homes and cars at lower interest rates.
As the trade war rhetoric escalates, some raise the fear that China could sell off its dollar-denominated assets, which could trigger a rise in interest rates, inflation and possibly devaluation of the dollar. Even the threat of a sudden sell-off can stir up trouble in global currency markets. China could also diversify its cash reserves away from the dollar and acquire yen, euro or sterling instruments, or commodities such as gold. Indeed, China has already been accumulating gold, ranking as one of the world’s largest importers of it.
China and the United States are too closely economically intertwined via the dollar to make that a credible fear. United States treasuries are still the world’s safe haven of choice. And selling off American debt would cause the yuan to appreciate, which would put China’s exports at a disadvantage.
Still, China is clearly taking steps to ensure a larger role for its currency. In 2015, the yuan was designated by the International Monetary Fund as one of five elite currencies in the world, along with the dollar, the euro, the pound and the yen. China is putting in place a pilot program with Russia and Angola, in which it can buy oil with yuan instead of with dollars. As the biggest importer of crude oil in the world, China believes it has the purchasing power to push for settlement in yuan. Even Saudi Arabia, a stalwart American ally, is under increasing pressure to accept yuan for its oil trade. If the yuan does become a global reserve currency, China, too, could see its influence and economic power expand even further.
尽管如此，中国显然正在采取措施确保人民币发挥更大作用。2015年，人民币被国际货币基金组织(International Monetary Fund)指定为与美元、欧元、英镑和日元并驾齐驱的世界五大货币之一。中国正在与俄罗斯和安哥拉实施一项试点计划，可以用人民币而不是美元购买石油。作为全球最大的原油进口国，中国认为它有购买力推动人民币结算。即使是美国坚定的盟友沙特阿拉伯也面临着接受人民币进行石油交易的压力。如果人民币确实成为全球储备货币，中国也可以看到它的影响力与经济实力进一步扩大。
This is a strategic priority for China, and it is willing to wait. Although it is impossible to predict whether or when the dollar will be dethroned, history offers some clues: The pound sterling reigned supreme before the dollar gradually dislodged it. While the president and his supporters raise doubts about open trade, the dollar’s supremacy is closely tied to it. There is nothing guaranteed about that status, or all the benefits that come with it.
本文作者Lan Cao是一名小说家、加州橘子郡查普曼大学戴尔·E·弗勒法学院(Chapman University’s Dale E. Fowler School of Law)国际经济法教授。
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