The US dollar will cease to be the de facto world currency as globalisation retreats, so China and the United States should work together to create a globally used cryptocurrency – a strategy that would weaken the dollar, encourage American exports and help balance trade between the two superpowers. These are the main takeaways from China’s Trump Card: Cryptocurrency and Its Game-Changing Role in Sino-US Trade , by Raymond Yeung, the chief Greater China economist at ANZ Bank. Yeung offers a novel, and somewhat wishful, proposal to one of the world’s most complicated and significant problems – the economic rivalry between the US and China. The book starts by analysing the contentious issue of how China can reduce its reliance on the US-dominated financial system, and goes into whether China will be able to end the US dollar’s dominance that enables Washington to threaten financial sanctions against Chinese firms and individuals. The author argues that China will continue to gradually cut the dollar holdings in its foreign exchange reserves, as well as reduce its use of dollars in cross-border trade and investment. However, the yuan has little chance of replacing the US currency, even though it is in the process of losing its anchor currency role. Given this situation, it would be of mutual benefit to China and the US to agree on the creation of a blockchain-based international cryptocurrency, Yeung said. With a [global] cryptocurrency, international balance becomes more ‘balanced’ Raymond Yeung The new universal currency, he writes, could put an end to the main portion of traditional trans-Pacific financial flows, namely China earning hundreds of billions of dollars from its exports to the US each year and then reinvesting those dollars in US financial instruments such as US Treasury securities, enabling the US to borrow cheaply and buy more. But if bilateral trade were to be settled in a super sovereign currency, it could help strike a new balance in trade and financial flows, the author argues. “With a cryptocurrency, international balance becomes more ‘balanced’,” he writes. Yeung’s book, published by Wiley, comes at a time when trade disputes between China and the US have escalated into a full-fledged economic, geopolitical and ideological rivalry. Diplomats, politicians, historians and economists alike are scrambling for solutions to ease the growing hostilities that have global implications. Yeung, who leads a research team in Shanghai and Hong Kong and travels across China frequently, is looking to contribute to the ongoing search for solutions. However, it is hard to imagine that Beijing would be able to use this trump card, since Yeung’s idea is basically asking Washington to deliberately end the global dominance of the US dollar, which affords the US many benefits. I cannot see the US standing aside to see the dollar challenged Andrew Sheng Andrew Sheng, former chairman of Hong Kong Securities and Futures Commission, called Yeung’s idea of replacing the dollar with a global currency “provocative”. “The controversial part is whether the world will ever agree on which agency would issue the world cryptocurrency, its governance and who controls it. I cannot see the US standing aside to see the dollar challenged,” Sheng noted. The notion of forging a universally accepted global currency faces a number of obstacles, especially given that trust between Beijing and Washington has reached its lowest point in decades. China’s former central bank governor, Zhou Xiaochuan, made a similar proposal in 2009, calling for the creation of a super sovereign currency based on the International Monetary Fund’s Special Drawing Rights accounting unit that would eventually replace the US dollar as the anchor of the global monetary system. The idea has made virtually no progress in the decade since Zhou proposed it. Yeung writes that it is hard to reconcile Xi Jinping’s “Chinese dream” aspirations with Trump’s “America First” policy, and so the best hope is that a cryptocurrency could “right the wrong done to the global monetary system”. “Economic measures are not a solution to end populism, unilateralism and protectionism,” he writes. “If the US decides to back off from its trade ties with China … the world economic outlook will continue to be structurally uncertain.”