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By Catholic Online (NEWS CONSORTIUM)

4/2/2013 (1 year ago)

Catholic Online (www.catholic.org)

Who needs armies when you have money?

There's more concern that China could be making a move to displace the dollar as the world's reserve currency. Tuesday, the yuan reached a record high against the dollar, hitting 6.2004 to the dollar.

The Yuan may become the world's dominant currency in the years to come.

The Yuan may become the world's dominant currency in the years to come.

Highlights

By Catholic Online (NEWS CONSORTIUM)

Catholic Online (www.catholic.org)

4/2/2013 (1 year ago)

Published in Business & Economics

Keywords: China, economy, growth, numbers, reserve, currency


LOS ANGELES, CA (Catholic Online) - The new record high for the yuan comes as the People's Bank of China continues to take measures to help the yuan appreciate in value. The yuan is expected to rise above 6.2 to the dollar this month.

The Chinese government is believed to be behind the appreciation of the yuan as well as other recent measures that are making the world take notice.

China is already the world's second largest economy, and it has been growing rapidly over the past two decades. The country still has room to expand. Rich in natural resources, China is both tapping its own while seeking out new reserves, particularly in Africa.

At home, China has already pre-built entire cities, which stand empty, waiting to be populated at a later date. The ready-built cities area  testament to the country's wealth and power and stand in contrast to what most people think about China.

Publicly, the government is moving to allow direct exchanges between the Australian dollar and the yuan, which cuts the U.S. dollar out of the exchange. The U.S. dollar is the world's reserve currency, but that distinction might not remain for much longer.

If China can get more countries to enter into direct exchanges, and cut out the dollar altogether, it may position its yuan to become the world's new reserve currency.

The impact of this to American markets would be significant, since the U.S. already trades at a favorable premium with most of the world and makes billions off simply providing the world's reserve currency. Now, China could be positioning itself to seize those profits from the U.S.

China is a large state, bent on world political and financial dominance. Despite its communist trappings, its leadership has slowly come to embrace capitalism, with the caveat that they control the wealth. With a labor pool of over one billion people and land and resources to spare, China is poised to beat America, and much of the free world, at its own game of capitalism.

The sooner traders awaken to this reality and understand that Chinese communism is just for looks, they can take steps to insulate themselves from the inevitable move by the Chinese government to displace the U.S. as the world's dominant economic power.

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