Since Donald Trump was declared president-elect of the United States, the Chinese capital market has experienced an unprecedented flight of foreign funds, calling into question the de-dollarization process that the Asian country began to promote together with some members of the group of the BRICS (Brazil, Russia, India, China and South Africa, among other countries that have recently joined).
In September, as a candidate, Trump sent a message forceful to the countries that had moved away from the US currency to trade. “If you leave the dollar, you will not do business with the United States because we are going to impose a 100% tariff on your products,” the Republican said at the time. Shortly after, India, which had decided to boost the use of its currency to distance itself from American money, announced that will not leave aside the dollarexpressing their disagreement with the de-dollarization agenda that has enveloped the global financial landscape in recent months.
Now, the data indicates a stampede of international investors from the Chinese market. This is reflected in the figures from the State Administration of Foreign Exchange of China (SAFE), which last month recorded a net capital outflow. This capital flight is 45.7 billion dollars, reaching a total of 234.6 billion dollars in outflows compared to only 188.9 billion in inflows, which represents a significant increase compared to the 25.8 billion dollars in October. This figure, reported by Reutersmarks a record and reflects a clear loss of confidence on the part of international investors in the Chinese market.
The flight of capital from the Chinese market is happening despite the efforts of the authorities to prevent it. They tried to contain the mass outflow by introducing economic stimulus measures amid worsening conditions, such as a recession in China’s property market and the accelerating decline in the value of the yuan.
More Read
Trump’s threat to Imposing new tariffs on China and other countries has accelerated the decline in the value of the yuanexacerbating the situation. The People’s Bank of China has noted that bond holdings by foreign institutions have decreased for the third consecutive month, indicating a trend of disinvestment in the Asian giant.
The Institute of International Finance (IIF) has analyzed that “the phenomenon of the strong dollar after President-elect Trump’s presidential victory had an impact on capital markets of emerging countries, including China. This analysis highlights how Trump’s protectionist policies are influencing the global economy, significantly affecting Beijing’s de-dollarization strategy.
China is going through a difficult time due to economic challenges such as the real estate market recession, sluggish consumption and deflation. Source: YouTube/Hash.
De-dollarization, a shot in the foot for China?
With this panorama, the Chinese government faces new economic challenges, proposing measures such as a higher fiscal deficit, the issuance of long-term government bonds and adjustments in reserves and interest rates to inject liquidity. However, BNP Paribas warns that “the momentum of China’s economic recovery depends on external variables such as the speed of implementation of economic stimulus measures and the timing of US tariffs.”
After all, The US currency has emerged stronger than everreaching a new record in its global participation in payments. Data, included in a reportpoint out that in the SWIFT interbank network, the use of the dollar in international transactions has climbed to 49%, the highest figure in the last 12 years. This trend indicates an increase of nine percentage points in the use of the dollar compared to the previous year, which reaffirms its predominance in a context of growing competition.
Meanwhile, dedollarization appears to be a locked gameespecially given the fact that many countries seem to resist the idea of a head-on clash with the West. But also for the need to establish a payment system independent that has not finally materialized and that, it seems, will not materialize in the short term.
Thus, Trump’s economic policy has slowed down de-dollarization, at least for now, if we take into account that this phenomenon was something that advanced progressively and that it has occurred due to several factors, such as global economic instability, geopolitical tensions or monetary autonomy.
Trump’s aggressive measures slowed the push toward a global economy less dependent on the dollar and have also reinforced their financial hegemony, leaving China and its allies in the BRICS in a position where they must recalibrate their international trade and investment strategies in an increasingly complex and hostile environment.
Crypto Keynote USA
For the Latest Crypto News, Follow ©KeynoteUSA on Twitter Or Google News.
