China’s Trump Card (E-Book) von Raymond Yeung

Acknowledgments ix

About the Author xi

Preface xiii

Chapter 1 An Unconventional Trade Feud 1

1.1 Thanos and Trump 1

1.2 What Causes the Trade War? 4

1.3 The Novelty of This Trade War 18

1.4 Economic Impacts and Consequences 26

1.5 Trade War and Deglobalization 33

Annex A: Chinas Belt and Road Initiative 38

Annex B: Official Statements from the US and China 39

Annex C: Major Timeline of the Trade War 42

Chapter 2 Trade Imbalances and the Greenback 46

2.1 The Missing Link between Trade and Currency 46

2.2 Stubbornly Persistent US Trade Deficits 48

2.3 Is the Exchange Rate to Blame? 56

2.4 Exorbitant Privilege of the Dollar 63

2.5 Dollar Recycling and the Global Saving Glut 70

Chapter 3 Deglobalization Prompts De-Dollarization 78

3.1 Anti-Multilateralism and Anti-Sovereign Movement 78

3.2 The Globalization Cycle 81

3.3 Currency Globalization 89

3.4 Financial Deglobalization 98

3.5 End of Cycle: De-Dollarization 105

Chapter 4 ChinaUS Financial Decoupling 111

4.1 Trade War and the Yuan 111

4.2 The Yuan in the Monetary Policy Context 115

4.3 Globalizing the RMB in the Deglobalizing World 129

4.4 Reserve Diversification 145

Chapter 5 A Race on the Digital Turf 156

5.1 Reform and Technology Independence 156

5.2 Chinas Structural Challenges 159

5.3 Chinas Digital Economy 168

5.4 The Tech Rush and the Little Chips 186

Chapter 6 Cryptocurrency and the Peoples Money 194

6.1 Deglobalization in the Digital Time 194

6.2 Bitcoin and Distributed Ledgers 197

6.3 Can Cryptocurrency Replace Money? 215

6.4 Regulatory Responses 220

6.5 Implication on Monetary Policy 223

Chapter 7 Foreign Reserves Go Digital 227

7.1 From Zhou to Carney 227

7.2 Reserve Currency Based on Liquidity 229

7.3 The Potential Role of Cryptocurrency in Global Reserving 238

7.4 Implication of the Libra Project 244

Chapter 8 The Endgame 249

8.1 The Trade War as the Perfect Shock 249

8.2 Libra or RMB, Which is the Designated One? 251

8.3 What Can China Do? 253

Bibliography 257

Index 269

Discover the impact of blockchain on the trade relationship between the world's two largest economies

China's Trump Card: Cryptocurrency and its Game-Changing Role in Sino-US Trade grapples with the fascinating issue of the effect of digital currencies on world trade and the relationship between China and the United States in particular. Full of forward-looking insights, solid data analysis, extensive collection of relevant literature and incisive observations, author Raymond Yeung compellingly argues that cryptocurrencies will have a significant role to play in harmonizing geopolitical power struggles.

Covering all the subjects required for a full understanding of the future of the Sino-US trade relationship,China's Trump Card discusses:

• The looming risks of de-dollarization in the wake of de-globalization
• The pressing need to construct a new currency standard superior to the fiat money regime in response to the global imbalance
• China's diversification of its offshore portfolios to include alternative investments
• The implications of Facebook's plan to create a blockchain-based digital currency
• The fact that blockchain offers a fungible asset class option for China's reserves investment, which can be relatively independent of political considerations

This book is perfect for business leaders, investors, financial analysts, policymakers, economists, fintech developers and others who have a stake in the outcome of the blossoming trade disputes between the United States and China.

RAYMOND YEUNG graduated with a PhD in Economics from Queen's University in Canada and is a holder of the Financial Risk Manager (FRM) certification. He began his economist career one week prior to the Asian Financial Crisis in 1997. He is currently Chief Economist Greater China at Australia and New Zealand Banking Group Limited (ANZ), leading an award-winning team covering the region's macroeconomic and financial market research. His insights have received strong following, including institutional investors, corporate treasurers, and central banks. He speaks frequently in industry conferences and shares his views on Bloomberg, Financial Times, CNBC, Di Yi Cai Jin, and Caixin. Prior to joining ANZ, Raymond was Deputy Head of Economic Research Asia at Swiss Re. He is a Council member of China Chief Economist Forum and a columnist in the Chinese media.