Zhai Dongsheng, the Chinese Communist Party (CCP) scholar who broke the big secret of America’s “old friends” last year, recently revealed in a video program the intentions behind Xi Jinping’s “One Belt, One Road” program, pointing out that the CCP not only wants the resources of the countries along the route, but also their lives. In the video, Zhai suggested that the CCP should use the epidemic and the Belt and Road to promote the internationalization of the RMB and replace the “American Dream.
In recent years, Zhai Dongsheng and Ren Zeping, experts in the system, have been suggesting that the CCP should “reap the hegemony of the US dollar” and compete for the center of the world.
Zhai Dongsheng’s New Interpretation of “One Belt, One Road”: The Communist Party of China Exports a “Strong Government” to Compete for the Center of the World
In early February 2021, Zhai Dongsheng, a senior CCP policy advisor and professor at Renmin University, declared in his column video “Political and Economic Qizhai” (video link) that he would build the “Belt and Road” in the post-epidemic era and export our experience and ability to be a strong government.
On February 2, 2021, Zhai Dongsheng tweeted about how to build an upgraded “Belt and Road” in the future post-epidemic era. (Screenshot of Zhai Dongsheng’s microblog)
In his microblog, Zhai Dongsheng promoted the video program (microblog link), saying that the Chinese Communist Party’s “Belt and Road” is not just chasing other people’s energy and mines, but “actually chasing the young lives of the countries along the ‘Belt and Road’. What we are chasing is actually the young lives of the countries along the Belt and Road.
In early February 2021, Zhai Dongsheng made a new interpretation of the “American Dream” in a video, and said that the CCP would control the monetary benchmark and “we [the CCP] will become the center of the world”. (Screenshot of Zhai Dongsheng’s video)
In the video, he gave a new interpretation of the “American Dream,” saying that the American Dream is the dream of the U.S. empire of the U.S. dollar, which acts as the center of the world and puts the world under the rule of the U.S. dollar.
According to Zhai Dongsheng, in the post-epidemic era, the dollar dream is going to wake up, and the Chinese government bonds will become the benchmark of global value, and “we [the Communist Party of China] are turning into the center of the world. He explained that the pricing currency will be the yuan in the future and that the CCP will control the pricing benchmark.
At the same time, Zhai also claimed that by “helping” developing countries, the CCP is exporting its “strong government” model. Zhai suggests that the CCP should upgrade the “Belt and Road” in the post-epidemic era, and invest more in countries along the route instead of borrowing money, in order to strengthen its control over local countries, and thus enhance the status of the RMB and establish a new value benchmark with the RMB as the pricing currency.
According to Zhai Dongsheng, the CCP’s export of the “CCP model” of governance and “strong government” is a form of building Xi Jinping’s “community of human destiny.
Zhai Dongsheng proposes to use the epidemic to “harvest dollar hegemony”
Zhai Dongsheng’s latest interpretation of Xi’s “One Belt, One Road” suggests that the key to the Communist Party’s struggle for the center of the world is the hegemony of the yuan and the dollar.
In particular, after the CCP triggered the New Crown Virus (Chinese Communist Virus, COVID) plague last year and let the epidemic hit the global economy hard, senior CCP policy advisor Zhai Dongsheng suggested in his video “The Great Opportunity of the RMB” (link to video (top); link to video (bottom)) released on April 1, 2020, that this is A “once-in-a-century opportunity”, a strategic opportunity for the RMB to “reap the hegemony of the US dollar”.
In the April 1, 2020 video, Zhai Dongsheng said the CCP has a “once-in-a-century opportunity” to “reap the hegemony of the U.S. dollar. (Screenshot of Zhai Dongsheng’s video)
In the video, Zhai Dongsheng first analyzed the impact of the epidemic on global financial markets, saying that the Federal Reserve’s expansion of its balance sheet (expansion) is equivalent to “printing money to dilute the wealth of savers around the world,” leaving 7 billion people around the world to pay for the U.S. national debt.
Zhai believes that this is the dollar hegemony, because the dollar is the global reserve currency, the Federal Reserve has become the world’s central bank, to the world minting tax.
However, Zhai Dongsheng said that this is actually “a great opportunity for a century of unprecedented change”, is the opportunity for the internationalization of the RMB.
Zhai said “some Wall Street friends told me”, now “provides a very good strategic opportunity …… in this a continued expansion of the U.S. monetary base, the process of imposing a global minting tax, in a large share of the pie “.
In the video, Zhai Dongsheng said the Chinese Communist Party “can run out and grab the business”. (Screenshot of Zhai Dongsheng’s video)
According to Zhai, the U.S. is printing money at a rapid pace without limits, and the U.S. dollar has pushed interest rates to zero, “so against this background, China (CCP) can come out and grab business.
Zhai Dongsheng suggested that “we can provide a new pool of assets to the world,” such as issuing special treasury bonds, partly to provide employment and spending power to the people within China, and partly to “provide yuan liquidity to people around the world who are short of dollars “.
Zhai suggested that “against the backdrop of a worldwide dollar shortage”, “we need to fill the gap”, and “this time we must be very generous and generous to provide liquidity to the world “We will get the internationalization of the yuan” and “a deep binding of the world to the Chinese economy and to our yuan monetary policy”.
On March 27, 2020, the Political Bureau meeting of the CPC Central Committee first proposed “issuing special treasury bonds”, and then the two sessions clarified “issuing 1 trillion yuan of special treasury bonds to fight the epidemic”; on July 30 of that year, all 1 trillion yuan of special treasury bonds to fight the epidemic were issued.
The Financial Times reported on December 13 last year (original article) that foreign funds had allocated more than 1 trillion yuan in stocks and bonds in the domestic capital market, and that China became the “only choice” for investors as global funds poured into mainland China during the epidemic.
Zhai Dongsheng preaches “One Belt, One Road” to determine the status of RMB
In fact, in recent years, Zhai has made several videos promoting the idea that the “Belt and Road” will determine the status of the yuan. In the videos, he says he has made these suggestions in high-level policy discussions in the Communist Party.
Zhai Dongsheng’s video in December 2019 said that the Belt and Road could determine the status of the yuan. (Screenshot of video from Zhai Dongsheng’s program)
In his December 2019 video, “Why “One Belt, One Road” Can Determine the Status of the RMB” (video link), Zhai Dongsheng said he had discussed the significance of the “One Belt, One Road” during his participation in the Communist Party’s Development and Reform Commission and China Development Bank planning, saying he should not He said he had discussed the significance of the “Belt and Road” during his participation in the planning of the Development and Reform Commission and the China Development Bank, saying that it should not focus on the goods of the countries along the route, but on their people, especially young people.
According to Zhai Dongsheng, the real meaning of the Belt and Road is not whether the Chinese Communist Party can recover its investment, but to turn the RMB into a pricing currency and gain pricing power.
He believes that the international monetary system was originally a bubble, and whoever has the pricing power will get the most benefit; previously, it was the US dollar that set the price and the US dollar was the center, while the Belt and Road will change the status of the RMB.
“In the future, we interact with 5 billion people, the poor countries of the ‘Belt and Road’, forming a new debt relationship,” Zhai said, noting that the key is that “the RMB will become the pricing currency. The new currency bubble will be centered on the RMB.
Zhai Dongsheng said, for example, that some U.S. strategic circles once questioned whether the Belt and Road Initiative was doomed to failure because poor countries could not afford to pay their debts. Zhai thinks they don’t see through the Belt and Road’s true strategic intent.
“But in the future we will have a new bubble (international monetary system) that reverses the global political, economic, cultural and power balance,” Zhai said. Zhai said the future pricing power of the currency of the new bubble, “the dominant power of this game, will be in our hands.”
Chinese Communist Party think-tank calls for challenging “dollar hegemony” and promoting the yuan through “One Belt, One Road
Zhai Dongsheng’s initiative on the yuan represents a mainstream view of the Communist Party’s think tank.
Since the Communist Party announced its Belt and Road Initiative in 2013, it has intended to spend or loan trillions of dollars to build highways, railroads and ports in Europe, Asia and Africa. (Thomas Peter- Pool/Getty Images)
Since 2017, Zhou Xiaochuan, known as the “father of the internationalization of the yuan,” has repeatedly called for the promotion of the yuan in the Belt and Road construction.
On May 4, 2017, then central bank governor Zhou Xiaochuan published an op-ed in China Finance magazine, entitled “Discussing and Building the “Belt and Road” Investment and Financing Cooperation System,” proposing the role of the yuan in the construction of the “Belt and Road.
On April 12, 2018, Zhou Xiaochuan spoke at the 2018 “One Belt, One Road” Financial Investment Forum, claiming that the local currency should play an active role in the “One Belt, One Road”.
In October 2019, Hu Biliang, director of the Belt and Road Research Institute of Beijing Normal University, published an article in the party media Reference News entitled “Belt and Road Brings New Opportunities for Global Development”, suggesting that authorities should make more use of RMB in the construction of the “Belt and Road” and issue more RMB loans. In September 2020, the former Communist Party of China (CPC) chairman, Mr. Li, said that the government should make more use of RMB loans and issue more RMB bonds to finance the construction of the Belt and Road.
In September 2020, former Chongqing Mayor Huang Qifan told a financial forum in Xi’an that the Communist Party planned to use the yuan “as much as possible” in the Belt and Road.
According to public reports in the Chinese media, as of March 2021, the CCP’s central bank had signed RMB swap agreements with nearly 40 countries around the world, more than half of which are along the “Belt and Road”.
Renminbi (local currency) swap agreements are agreements between two parties to exchange a certain amount of local currency for the equivalent value of the other party’s currency for bilateral payment settlement, and are one of the main measures taken by the CCP to promote the internationalization and “de-dollarization” of the renminbi.
In February 2021, Ren Zeping, a well-known mainland economist, published an article entitled “How the “Arrogant Dollar Hegemony” Shears the Wool Around the World” (original article), calling the dollar-dominated international monetary system “dollar hegemony”. According to him, the hegemony of the US dollar is based on the value-accounting function, deriving from the trade settlement function, and gradually expanding to the investment and financing function, becoming the anchor of global reserves and currency.
Ren suggested that the Chinese Communist Party authorities should reduce the proportion of U.S. dollar assets and promote the use of RMB in cross-border trade valuation and settlement through the FTA and the “Belt and Road”.
Background of the Dollar Era vs. RMB Internationalization
After World War II, Western countries established the Bretton Woods monetary system, which pegged the US dollar to gold and anchored national currencies to the US dollar, thus establishing the US dollar as the center of international currency.
In 1971, the dollar was decoupled from gold, and the world entered the era of no anchor currency (credit currency). However, the United States relied on its comprehensive strength to tie the dollar to commodities represented by oil and established the “petrodollar”, thus maintaining the central position of the dollar.
According to the data of international financial institutions such as SWIFT, BIS and IMF, the U.S. dollar has always been the top global payment currency, with 95% of international commodities denominated in U.S. dollars, 86.5% of international trade settled in U.S. dollars, and about 85% of all foreign exchange transactions in U.S. dollars; at the same time, the U.S. dollar is also the strongest global financing At the same time, the dollar is also the world’s strongest financing currency, with about half of all cross-border loans and international debt securities denominated in dollars, and 61% of international reserves are dollar-denominated assets; the dollar is also the world’s first anchor currency, with nearly 20% of economies directly anchored to the dollar; the Federal Reserve has also assumed the function of the world’s central bank, and the world is affected by the Fed’s monetary policy.
Twelve years ago, when the U.S. subprime mortgage crisis hit global financial markets, the Chinese Communist Party began to try to get rid of the U.S. dollar.
In early December 2008, the central bank of the Communist Party of China and the Bank of Korea signed a bilateral local currency swap agreement of RMB 180 billion/KRW 38 trillion. Immediately afterwards, Zhou Xiaochuan, then governor of the central bank, published an article “Thoughts on Reforming the International Monetary System” on March 23, 2009. Since then, the Chinese Communist Party has been promoting the internationalization of the RMB.
According to a report in the Chinese media in March, the CCP central bank has signed local currency swap agreements with nearly 40 countries, boasting that the RMB is “the largest swap in the world.
The U.S. government often uses the central position of the U.S. dollar to impose financial sanctions on rogue regimes that violate human rights. The Chinese Communist Party, Russia, Iran and other regimes that have been repeatedly sanctioned by the US are among the main advocates of “de-dollarization. Measures to “de-dollarize” include signing local currency swap agreements and building an international payment clearing system independent of the U.S. dollar.
According to the Voice of America (original article), Russian Foreign Minister Sergei Lavrov gave an interview to the Chinese Communist Party’s official media CCTV before his visit to China on March 22, in which he called on China and Russia to reduce the use of the U.S. dollar and promote local currency settlement to reduce the risk of sanctions.
Despite the coveted status of the world’s central currency, individual countries have been trying to promote “de-dollarization” for years. However, due to the comprehensive power of the United States and the institutional characteristics of freedom, democracy and stability, there is no substitute for the central position of the U.S. dollar so far.
This year, the Chinese Communist Party issued the outline of the 14th Five-Year Plan at its two sessions, in which the policy statement of “internationalization of the RMB” was downgraded from “steadily promoting” in the 13th Five-Year Plan to “prudently promoting” in the 14th Five-Year Plan. The policy statement of “internationalization of RMB” has been downgraded from “steadily promote” in the 13th Five-Year Plan to “steadily promote” in the 14th Five-Year Plan.
Current affairs commentator Li Linyi analyzed that the Chinese Communist Party knows very well that it is an impossible task to promote the internationalization of RMB within the system, so it can only cool down and be “steady and cautious”.
Li Linyi pointed out that the biggest obstacle to the internationalization of the RMB is the exchange rate and foreign exchange control, which is the last firewall of the CCP to prevent economic collapse, and naturally the bottom line that the CCP cannot release. In other words, the CCP only wants to use the RMB to dominate and export its influence, but it is unwilling and unable to take the responsibility and risk of an international currency.
Recent Comments