A “new phase of globalization” is Taking Shape in Beijing, Flag Planted on American Soil
The Red Dragon is roaring. The headline news over the weekend was that Chinese President Hu Jintao called the currency system a “product of the past.” Hu believes that Chinese currency will likely become the world’s currency within the not-to-distant future. On the heels of that announcement, a Financial Times article highlights the role that China already has within a new system of globalization; one that supplants the U.S. as a key trading partner at the hub of the global trade wheel.
Here is a perfect summary of the current situation:
Over the past few decades, China has benefited hugely by hitching itself to a process of globalization where the rules were written in Washington and the American consumer was the buyer of last resort. China prospered by making first the socks, then the washing machines and finally the iPods sold at Walmart.
Now China is moving beyond cheap consumer goods to infrastructure such as power equipment. By supplying developing countries with the tools to grow, China is becoming a principal global investor. In so doing, it is entrenching itself as an engine of growth for the future, which has an added effect of laying the groundwork for its own currency to take a central role in the new relationships being developed.