Economists at JP Morgan, the largest US bank by assets, published a research paper on de-dollarization in 2023.
In reference to the global economy as a whole, they concluded that, “while marginal de-dollarization is expected, rapid de-dollarization is not on the cards”.
However, they argued that, “Instead, partial de-dollarization — in which the renminbi assumes some of the current functions of the dollar among non-aligned countries and China’s trading partners — is more plausible, especially against a backdrop of strategic competition”.
The JP Morgan economists added, “This could over time give rise to regionalism, creating distinct economic and financial spheres of influence in which different currencies and markets assume central roles”.
This seems inline with the Chinese leadership game of influence, as well as the clown show that the US has become. Even with the interest still there from the US standpoint two decades of GWT, the lack of prioritize spending on following our so called values, the very high debt to GDP ratio we are running, the lack of real legislative ability, plus other challenges, all make the fundamentals seem less fundamental. Although China very much has it’s own issues such as an excess of manufacturing, a housing bubble, and a very steep demographic bubble. So their fundamentals are seemingly similar in question, but they have a marked ability to pivot quickly and do seem to be using their status as the 2nd largest economic to garner the same level of influence.
Whether either has staying power of economics and global influence for the next 50 years is a very interesting question.
I certainly don’t count the US out yet, but even if the election settles things down, there is some real work to do which has little to do with the current hotly discussed policy topics. I’d be curious about your opinions?
Very interesting. I’d say China will only increase and cheapen its production even more, which will allow them to push their influence. They have been focusing on doing exactly that, by building efficient transportation networks, putting increasingly more companies’ equities in the hands of the state (and therefore sidestepping investors), and, recently, setting up abundant facilities for cheap, green energy production. All three of those policies rely for their swift and massive realization on what US policymakers nowadays seem to refer to as “non-market” dynamics, which are basically out of the question for them.
