As trade war rages, China may step up efforts to create an alternative to US dollar hegemony
- Arrest of Huawei CFO underscores how the US’ dominance of financial markets gives it geopolitical clout
- China and other nations have long sought an alternative to the US dollar hegemony
As the trade war rages on and China grows more frustrated with the US dollar hegemony which gives the US such authority on the world stage, it may step up efforts to create an alternative payments system to rival the American currency, experts have said.
The US, after 70 years of promoting globalisation, open trade and defensive alliances, has turned its back on the tenets of openness in favour of a more nationalistic approach. This poses the question as to whether the world is ready for change and if the door is open for a new framework.
“If all these things are no longer seen as reliable, then you are under pressure to defend for yourself and construct some alternative framework,” said Richard Jerram, chief economist at Bank of Singapore. “President Trump is promoting an ‘American first’ policy, so you cannot rely on America to keep its borders open for trade, or to rely on it to support the [World Trade Organisation] or the United Nations and the [International Monetary Fund]. So you can understand why countries are looking for substitutes.”
“In a world of fracturing of multilateral order, countries will be looking to reduce their dependence on the US.”