Time for China to decouple the yuan from US dollar, former diplomat urges
- US will pose ‘increasingly severe threat’ to future Chinese development through dollar’s global monopoly
- Preparations for gradual decoupling and internationalisation of the yuan should begin ‘now’
China must brace for a full-blown escalation of the struggle with the United States and prepare to gradually decouple the Chinese yuan from the US dollar, a former senior Chinese diplomat warned amid the continued downward spiral in relations between the world’s two largest economies.
Zhou Li, a former deputy director of the Communist Party’s International Liaison Department – which manages relations with foreign political parties, organisations and elites – is the latest in a series of voices in China calling for the country to be ready for a currency split with the US amid growing signs of financial war in recent weeks.
“By taking advantage of the dollar’s global monopoly position in the financial sector, the US will pose an increasingly severe threat to China’s further development,” Zhou wrote in the full version of an article published on Saturday by the Beijing-based think tank Chongyang Institute for Financial Studies at Renmin University.
China should now make preparations to insulate itself from “dollar hegemony and gradually achieve the decoupling of the renminbi from the US currency”, Zhou said. “The US dollar could become a major risk issue that ‘has us by the throat’.”
His remarks also mirrored a growing consensus in Beijing that China should “give up the illusion” of friendship but instead prepare for a full-fledged conflict with the US.
Zhou – a member of the national committee of the Chinese People’s Political Consultative Conference (CPPCC), the country’s top political advisory body – warned that the unlimited quantitative easing programme undertaken by the US Federal Reserve created a real risk of devaluing the dollar assets held by Chinese financial institutions, companies and individuals.