Xi’s Vision for China in Global Market
Last month, China’s President Xi Jinping vowed to lead global trade, in that he would ensure China was open to trade agreements globally. In a move considered to be taking advantage of Donald Trump’s election victory, President Xi’s vow came following Obama’s trade liaison with Japan. Xi offered his vision of a Chinese led system in which they are open to trade and invest, fully involving China in economic globalization.
Toward the end of the year, it is commonplace for many people to predict the forthcoming year’s financial stability and forecast. With global economics being in the precarious state they are, it seems to be a trying time for China, who need to keep their annual growth at the 6.5 per cent it currently rests at. This is down from 6.7 last year.
President Xi is making a clearly strategic move to improve relations between China and the U.S., the world’s two biggest economies. Given Trump’s move to work towards economic and energy independence for the U.S., Xi has picked a strategic time to talk about leading the way with his open trade agreements, as Beijing needs stability. The UK, too, is in a place of uncertainty regarding free trade, due to its imminent exit from the EU.
Xi said last year that he had hoped to create a currency to rival the dollar and bring it down from hegemony. However, the recent performance of the yuan suggests that this is a long way off yet. That said, 2017 is still an unknown territory and could see a huge swing in the value of the dollar, which remains volatile and linked to the changes in the cabinet due in January.
Yuan in global markets
The global economy has been something of a moveable feast for the latter quarters of this year, following both Brexit and Trump’s election. Traditional safe haven currencies have even fluctuated against the unstable dollar. The Chinese yuan has seen a noted depreciation following this surge in the dollar. Foreign exchange traders using metatrader platforms have seen an decrease in value of the Yuan as it hit an eight year low last week. However, speaking to Chinese media, Yi Gang, the deputy governor of the People’s Bank of China said that the currency is still strong and stable. It is stability which the dollar lacks, and with Trump’s presidency officially starting in January, some advisors think the yuan should be left to depreciate further, in order to see how it fairs up in these times of instability.
President-elect Trump used China’s economy to accuse the country of currency manipulation throughout his electoral campaign, also saying that he plans to add 45-percent trade tariffs on goods imported from that country.
The message here is that while the dollar may be riding high currently, it is volatile, whereas the yuan is already stable and is being lowered strategically.
Marcus Turner Jones graduated in economics from the University of Sheffield before working in London and Madrid. His particular area of expertise are the Latin American markets. He currently lives in Buenos Aires as a freelance writer and investor, with his dog, Luna.