Beijing has again made it plain in the last week that it is unhappy with the sole reserve status of the US dollar. It is trying actively to do something practical about it, not merely to promote a debate, but at the same time it is realising the cruel facts of global realeconomik (the economics of realpolitik). Unfortunately, solving the problems of the role of the dollar as the global reserve currency is complicated and there are many players and opinions about what to do and how to go about it. It is easy to understand the frustration of China, which must be careful not to behave like a brilliant adolescent discovering his strength as he grows up but lacks the maturity to handle the complexity of a rapidly changing world. When it comes to the crunch China still has to live in the same global economic house as the US, and the most recent US figures show that China has been increasing its holdings of US treasuries. In March, it added US$15 billion in long-term treasuries and a total of US$34 billion in long and short-term US claims. Last week, Brazil's President Luis Ignacio Lula da Silva was in China, and the two countries promised to make more use of their two currencies in trade. The promise was accompanied by some well-chosen words of unhappiness about the dollar's domination. Mr Lula expressed anger in interviews with Chinese media: 'Between Brazil and China, we need to establish a trade that is paid for in our own currencies. We don't need dollars ... Otherwise, we will be in an absurd situation, where the country that caused this crisis will be the country that gets the most dollars. 'It's crazy that the dollar is the reference, and that you give a single country the power to print that currency.' The promises of greater yuan-real trade followed Beijing's swap arrangements with Argentina, Indonesia, Malaysia, South Korea and others, and pilot plans to use yuan as a settlement currency in Hong Kong and Macau, all seen as steps to internationalise the currency. One problem for China and others that have run up huge trade surpluses is that they are sitting on huge piles of dollar assets. About 70 per cent of China's almost US$2 trillion reserves are in dollar instruments. Beijing literally cannot afford to rock the dollar boat too suddenly since a dive in the value of the dollar will mean billions being wiped off the value of the holdings. Some leading economics bloggers even in the US are beginning to talk of a possible debt default by the heavily indebted US. That may seem far-fetched, though a few decades ago the perceived wisdom was that countries do not default on their debts, to which Latin America gave the lie. A huge dollar devaluation would achieve the same object, and such could be hastened by any downgrading of the triple A credit rating of the US by rating agencies - which is being increasingly talked about. It is easy to see why China is unhappy with trade being conducted in dollars. If its trade with the US were conducted in yuan, the US would have to bear the risks of its deficits, and China would not have to worry if the dollar was devalued.