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Currency Wars are Damaging to Economies and US-China Know This

Currency Wars are Damaging to Economies and US-China Know This

Former China central bankers are now warning of protracted currency-war risks in the now escalating war that seems to have no end. This piece was written after sourcing an article on Bloomberg News, that discussed a finance meeting in China. Former PBOC Governor Zhou Xiaochuan said at the gathering that conflicts with the US could expand from the trade front to other areas, including politics, military and technology. The Former PBOC Governor Zhou called for efforts to improve the yuan and its global role to deal with challenges of a dollar-denominated financial system.

While the US and China both have a trade war strategy the US seems to have many advantages in terms of its ability to influence trade flows, as well as food and energy security. Clearly there will be more challenges but the next six months will likely be a trade war that turns into something much more dangerous. And with some key figures more recently saying that China should work to increase the use of the yuan in global trade such as the purchase of commodities, it is clear that these two economic powers are moving apart. One official in China warned, “more ensuing measures are likely coming.” Watch for more engagements in the coming weeks and months but do not expect a trade deal for many months, it will not happen.

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