Reply to post: Re: Airbus & China

No Huawei out: Prez Trump's game of chicken with China has serious consequences

Charlie Clark Silver badge

Re: Airbus & China

Never say never, as history has often taught us.

I agree that the Renmimbi is unlikely to replace the US Dollar, but that doesn't mean that the Dollar's hegemony won't be challenged, especially if it adopts an isolationist position for any period of time. The current status is probably worth at least 1% for US interest rates. Of course, if yields did spike, then there would be a move into US debt, but if rates stayed high then a debt servicing costs would rise and a recession would be likely.

However, as with the decline of British Pound in favour of the US Dollar, any realignment is likely to take time. The Renminbi won't be relevant until it becomes convertible and the Chinese government has lots of reasons why it wants to avoid this. But we may well see more and more deals, initially government but then commercial ones, that are not in US Dollars. Still a drop in the ocean but some asian econmies could move away from the dollar fairly quickly. The Asian Development Bank and the Belt & Road initiatives are bumbling attempts to pave the way for this. Sadly, however, Trump's attitude towards partners and allies is proving about the best advert for them.

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