China
U.S. national debt is its Achilles’ heel, but China sees it as an opportunity
China is emerging as a dominant force in the Global South, challenging U.S. dollar hegemony by increasing gold reserves and reducing U.S. debt holdings, aiming for a multipolar economic landscape.
China is gradually establishing itself as a major player in what has recently been called the Global South, previously known as the Non-Aligned Movement. Over the last few decades, China has become the world’s biggest creditor of developing countries. That has prompted many to fear that it will subjugate partners through the “debt trap” and use this to establish a “hegemonic sphere of influence.”
China’s economic position is so strong that it is now considered the main threat to the U.S. dollar. It is an influential member of the BRICS+ group (which also includes Brazil, Russia, India and South Africa). This group is working to establish a multipolar world that challenges the hegemony of the West, specifically the leadership of the United States. I analyzed this issue in a previous article.
Without using the term “threat,” the U.S. administration now sees China as the “most serious long-term challenge” to the international order. It’s easy to understand why, since China’s strategic objective is to put an end to the supremacy of the U.S. dollar, the keystone of U.S. hegemony.
As a researcher in international political economy at the Université Laval, I am looking at the role China is playing in the dedollarization of the world.
The stronghold of the U.S. dollar
The supremacy of the U.S. dollar underpins American hegemony in the current international order, as French economist Denis Durand explains in his article Guerre monétaire internationale: l’hégémonie du dollar contestée? (International currency war: the dollar’s hegemony challenged?).
In addition to the fact that several currencies are linked to the dollar by a fixed link or band of fluctuation, American currency is also used in many Third World and Eastern European countries, where it enjoys a much higher level of public confidence than do local currencies. […] The United States is the only power that can incur foreign debt in its own currency.
The hegemony of the U.S. dollar over the world economy is reflected in its over-representation in the foreign exchange reserves held by the world’s central banks. The greenback still outstrips other currencies even though there has been some erosion in this.
Despite a fall of 12 percentage points between 1999 and 2021, the share of the U.S. dollar in the official assets of the world’s central banks remains fairly stable at around 58-59 per cent.
U.S. currency still enjoys widespread confidence around the world, reinforcing its status as the preeminent reserve currency. The U.S. dollar reserves of the world’s central banks are invested in U.S. Treasury bills on the U.S. capital market, helping to reduce the cost of financing both government debt and private investment in the United States.
However, the income generated for the U.S. economy by the hegemony of its dollar could also collapse like a house of cards. Durand makes this point when he writes that “the monetary hegemony of the United States […] is held together only by the confidence of economic agents around the world in the American dollar.”
There are two reasons that the world’s confidence in the U.S. dollar could decrease.
Firstly, as U.S. Treasury Secretary Janet Yellen admitted in an interview in April 2023, the United States is unequivocally using its dollar as a tool to bend enemies — but also some recalcitrant allies — to its will. This could ultimately undermine the dollar’s hegemony.
On the other hand, the U.S. debt situation, particularly its unsustainability, is a source of concern that could affect the dollar’s attractiveness as a global reserve currency.
Unsustainable debt
The U.S. dollar has been at the heart of the international monetary system since 1944, and even more so since the Bretton Woods Agreement came into force in 1959.
The Bretton Woods system was based on both gold and the greenback, which was the only currency convertible into gold; this convertibility was fixed at the rate of $35 per ounce.
That changed on Aug. 15, 1971, when, because of inflation and the growing imbalances in the United States’ international economic relations, Richard Nixon announced the end of the dollar’s convertibility into gold.
With the dollar pegged to gold, the United States’ ability to take on debt to meet public spending was limited. Under the gold-based system, where gold was the guarantor of the U.S. currency, the United States could only borrow according to the quantity of dollars in circulation and its gold reserves.
Abandoning the gold-based system gave the U.S. free rein over its debt. In 2023, the U.S. public debt reached more than $33.4 trillion, nine times the country’s debt in 1990.
This astronomical figure continues to raise concerns about its long-term sustainability. As U.S. Federal Reserve Chairman Jerome Powell has pointed out, U.S. debt is growing faster than the economy, making it unsustainable in the long term.
An opportunity for China
This is a reality to which China is clearly attuned, since it recently undertook a massive sell-off of the U.S. debt it owned. Between 2016 and 2023, China sold $600 billion worth of U.S. bonds.
However, in August 2017 China was the United States’ largest creditor, ahead of Japan. It held more than $1.146 billion in U.S. Treasuries, almost 20 per cent of the amount held by all foreign governments. Beijing is now the second-largest foreign holder of U.S. debt, with a claim of around $816 billion.
It is certainly no coincidence that before divesting itself of U.S. bonds, Beijing first launched its own gold pricing system in yuan. In fact, on April 19, 2016, the Shanghai Gold Exchange, China’s operator for precious metals, unveiled on its website its first “fixed” daily benchmark for gold at 256.92 yuan per gram.
This policy is part of China’s strategy to make gold a tangible guarantee of its currency.
China’s “Gold for Dollars” strategy
China is also selling its U.S. bonds. According to the U.S. Treasury, between March 2023 and March 2024, China sold off $100 billion in U.S. Treasuries, on top of the $300 billion it had already sold off over the past decade.
At the same time, the Middle Kingdom has replaced around a quarter of the U.S. Treasuries sold in 10 years with gold, of which it is now the leading producer and consumer. Like China’s central bank, other central banks in emerging countries continue to buy gold.
China’s appetite for gold was confirmed in 2010, when its gold reserves rose to 1,054 tonnes, from around 600 tonnes in 2005. Ten years later, in 2020, its stock of gold had almost doubled again, to nearly 2,000 tonnes. By the end of 2023, with a gold reserve of 2,235 tonnes, China will be the country with the sixth-largest gold reserve.
As a substitute for the dollar, gold enables China to store the gains from its large trade surpluses. With the Shanghai Gold Exchange, which offers gold trading contracts in Yuan, Beijing is seeking to strengthen the use of its currency abroad with the aim of establishing the yuan as the benchmark currency for the global economy.
This article is republished from The Conversation under a Creative Commons license. Read the original article.
Business
China Reports Agreement on Ceasefire between Myanmar’s Factions
Myanmar’s conflicting parties have reached a ceasefire agreement, facilitated by China, aiming to reduce violence and promote peace in the region.
Myanmar Ceasefire Agreement
In a significant development, conflicting parties in Myanmar have reached an agreement for a ceasefire, with China facilitating discussions. This breakthrough is crucial for restoring peace in a nation that has been marred by violence and political strife in recent years. The ceasefire aims to pave the way for reconciliation efforts and improve the humanitarian situation in affected areas.
Role of China
China’s involvement as a mediator highlights its growing influence in resolving regional conflicts. The Chinese government has been working closely with both sides to promote dialogue and trust, crucial elements for a long-term peace solution. Increased stability in Myanmar can benefit regional security and economic development, making China’s mediation significant.
Looking Forward
The hope is that this ceasefire will lead to further negotiations addressing underlying issues in Myanmar. While challenges remain, both parties have expressed willingness to work towards a peaceful resolution. The international community will be watching closely to see if this ceasefire can be sustained and lead to enduring peace for the people of Myanmar.
China
2024 China Economic Review: GDP, Trade, and Foreign Direct Investment Analysis
In 2024, China’s economy grew 5%, supported by stimulus measures, strong exports, and high-tech investments, despite weak domestic demand and demographic challenges. Key sectors like manufacturing and digital economy thrived, necessitating structural reforms for sustained growth into 2025.
China’s economy grew 5% in 2024, driven by stimulus measures, strong exports, and high-tech investment, despite challenges like weak domestic demand and demographic pressures. Structural reforms and targeted policies are essential for sustaining growth into 2025.
China’s economic performance in 2024 saw a return to steady growth, achieving a 5 percent GDP expansion in line with the government’s target, as per the official data released by the National Bureau of Statistics (NBS) on January 17, 2025. This outcome was largely bolstered by stimulus measures that helped drive a stronger-than-expected fourth-quarter recovery. While the country’s economy faced challenges such as declining population numbers and sluggish consumer demand, there were signs of optimism across key sectors, including industrial output and digital economy growth.
Additionally, China is beginning to pivot away from its dependence on the property sector, with the digital economy playing an increasingly significant role in economic expansion.
This article explores the major economic highlights from 2024 and examines the key trends, challenges, and opportunities that will shape China’s economy in the year ahead.
In 2024, China’s GDP reached RMB 134.91 trillion (US$18.80 trillion), maintaining its position as the second-largest economy in the world, behind only the United States, whose projected GDP for 2024 stands at approximately US$29 trillion. This reflects a year-on-year growth of 5.0 percent, in line with the government’s official target of “around 5 percent“ set during the 2024 Two Sessions. While slower than the 5.2 percent growth achieved in 2023, it highlights a stable recovery largely driven by strong export performance and targeted stimulus measures throughout the year.
The economy saw accelerated growth in the final quarter of 2024, with GDP expanding by 5.4 percent, surpassing expectations and making a substantial contribution to the overall 5.0 percent increase. Indeed, quarterly growth performance in 2024 showed steady improvement: the first quarter recorded a 5.3 percent increase, followed by 4.7 percent in Q2, and 4.6 percent in Q3.
Sectoral performance highlights revealed the manufacturing and service sectors as key drivers.
| This article was first published by China Briefing , which is produced by Dezan Shira & Associates. The firm assists foreign investors throughout Asia from offices across the world, including in in China, Hong Kong, Vietnam, Singapore, and India . Readers may write to info@dezshira.com for more support. |
Read the rest of the original article.
China
How China’s appetite for salmon could reshape global seafood markets – new research
China’s salmon demand surged 46% in 2023, prompting global exporters to respond. Challenges in domestic salmon production highlight opportunities for rainbow trout, reshaping the seafood market towards sustainability and consumer preferences.
China’s demand for farmed salmon is growing at an unprecedented pace. In 2023, its imports grew by 46% year on year – with imports of fresh and chilled Atlantic salmon up 63%.
This remarkable growth is reshaping the global seafood trade. Exporters from Scotland, Norway, Chile, Australia, Faroe Islands, Canada and Iceland are racing to supply the needs of this vast and rapidly evolving market.
At the same time, China’s efforts to produce its own Atlantic salmon have faced significant challenges, highlighting the need for substitutes like rainbow trout to meet the country’s growing appetite for seafood delicacies.
An important shift occurred in 2018, when the Chinese government permitted rainbow trout to be labelled and sold as salmon. This decision blurred the distinction between imported Atlantic salmon and locally farmed rainbow trout, creating a more accessible option for cost-sensitive consumers.
Trout is comparable to salmon in appearance and size, with firm and oily meat that has a similar orange-pink colour. Nutritionally too, the species are alike, as are the ways in which they can be cooked and prepared.
In our new research which included taste tests, we found that many Chinese consumers could not distinguish between domestic rainbow trout and imported Atlantic salmon in blind testing. But when informed about the origin, testers’ preferences shifted strongly in favour of imported Atlantic salmon, highlighting the power of provenance in consumer tastes.
Although people’s willingness to pay did not vary initially in our blind tests, it became a decisive factor once the origin of the fish was revealed.
But we found that origin alone was not enough. For our testers to be prepared to pay higher prices, they also had to like the look, smell and taste of the product more, or be persuaded by its ecolabel (indicating environmental standards).
Environmental costs
Transporting Atlantic salmon from Scottish lochs, Norwegian fjords or Chilean waters to Chinese markets involves complex logistics and significant environmental costs. The carbon footprint of this trade, combined with the resource-intensive nature of salmon aquaculture, raises critical concerns about sustainability.
These challenges are particularly pronounced in China, where consumers have a strong preference for freshness. This drives demand for quick delivery of imported salmon despite its environmental impact, and consumers are increasingly turning to online platforms to buy their seafood.
E-commerce has reshaped seafood retail in China, offering quick delivery and products that cater to consumer demand for quality and freshness. Salmon stands out in this market due to its perceived high value, premium quality and price point. Unlike other expensive seafood that often needs to be sold live to maintain its value, salmon retains its appeal when chilled or frozen.
This makes salmon particularly suited to modern retail models, where sophisticated cold-chain logistics ensure its freshness without the complexities of live transport. However, these innovations come at a cost.
The energy-intensive storage and rapid transportation required for imported salmon contribute significantly to environmental harm. As China’s seafood market continues to grow, addressing the sustainability challenges associated with this trade will be critical to balancing consumer demand with environmental responsibility. Current international certification schemes aiming to improve the sector’s sustainability have had limited impact in China so far.
A worker processing imported fresh salmon in a Beijing wholesale seafood market.
David Little, Author provided
China has made significant efforts to establish a domestic Atlantic salmon industry, but these attempts have largely been unsuccessful due to technical challenges and environmental constraints. This has left a gap that domestically farmed rainbow trout is poised to fill.
A trout farming raceway in Chengdu, China, supplied with fresh river water.
Zixuan Ma, Author provided
In 2022, China produced 37,000 tonnes of rainbow trout. This is a relatively small amount compared with international production levels, but still notable considering that rainbow trout is a new farmed species in China, unlike traditional species like carp.
However, rainbow trout farming in China is geographically constrained, as the species thrives in cooler freshwater temperatures found in higher-lying lakes and reservoirs, as well as in “raceways” (channels supplied continuously with fresh water diverted from rivers).
Advances in aquaculture systems offer a potential pathway to expand China’s production. Trout farming is a more sustainable, locally sourced alternative to Atlantic salmon that reduces the carbon footprint associated with imports and ensures fresher options for Chinese consumers. Developing a robust domestic trout industry could enhance food security, reduce dependence on imports, and create economic opportunities in rural areas.
China’s evolving seafood market offers valuable lessons for the global industry. Emphasising quality, freshness and sustainability will resonate with the increasingly sophisticated Chinese consumer.
At the same time, investment in eco-friendly aquaculture practices, both domestically and internationally, will be essential to balance the growing demand for premium seafood with environmental responsibility. These could include reducing feed waste and recirculating aquaculture systems (which filter and reuse water) to minimise water use. Recycling waste nutrients by using them elsewhere in food production could also be key.
As rainbow trout gains prominence in China’s seafood landscape, the relationship between consumer preferences, environmental concerns and economic opportunities could in turn shape the future of the global salmon trade.
If domestic fish captures a larger share of the Chinese market, salmon producers in Europe, Canada and other exporting regions may face significant challenges. This could ultimately force them to rethink their strategies in order to adapt to shifting market dynamics.
Although the goal of creating a domestic Atlantic salmon industry has proved difficult for China, trout farming presents a practical and sustainable solution for its luxury seafood sector.
This article is republished from The Conversation under a Creative Commons license. Read the original article.
- China Reports Agreement on Ceasefire between Myanmar’s Factions
- 2024 China Economic Review: GDP, Trade, and Foreign Direct Investment Analysis
- How China’s appetite for salmon could reshape global seafood markets – new research
- China Limits Apple Operations as BYD Manufacturing Moves to India and Southeast Asia Amid Trade Frictions | International Business News – The Times of India
- China’s GDP Grows 5% in 2024: Key Insights and Main Factors
- Can science be both open and secure? Nations grapple with tightening research security as China’s dominance grows
