China works to build new, multi-currency war

Xi Jinping wants China to expand to deflate USA's global domination bubble

China's foreign economic policy has always been based on the clash of two lines:

In one of those lines, the Chinese economy is doing well under the conditions of the existing system, with a dollar peg and USA's economic dominance. Even long before Trump, the West was trying to promote the idea of transoceanic partnerships, suggesting that China needs to use all advantages that it has.

The other line suggests that China should not await mercy from Washington, but work to build a new, multi-polar and multi-currency world.

Judging from the materials of the 5th Plenum of the Central Committee of the Communist Party of China, it appears that the second line of the development of China's foreign economic policy obviously prevails, while the idea about the need to find a place under the sun of the dollar-based economy is being pushed into the background.

Pravda.Ru observer Said Gafurov talked about these issues in an interview with Alexey Maslov, a Sinologist, Acting Director of the Institute of Far East.

To understand how China will act, one must understand the logic of China's development. This logic has always been almost the same, be it the Middle Ages, or modern times.

As soon as the surplus product in China increases noticeably, as soon as all internal production ties are developed and put into practice, China inevitably begins to expand. In this case, China has to go beyond its borders. In the past, China could do it physically, but of course, it can not do it today. Still, China uses the same scheme, but on a different level: it takes part of its economy outside the borders of China. This is how large investment and economic projects appeared, such as One Belt - One Road initiative, for example.

China always thinks of itself as a global country

All of a sudden, probably for the first time in the history of China, the globalization of China was stopped by factors that had nothing to do with China at all. It goes about the pandemic. People do not care about globalization. On the contrary, during the coronavirus pandemic, we saw so many ties and connections falling apart. We could witness the crisis of cofidence, when so many countries do not trust each other, when people don't trust people, governments, doctors, etc.

China came across hostile and uncomfortable environment. In light of all this, it is very important to let both the world and the Chinese people know that China still has global goals to pursue. These global goals are related:

  • to the expansion of the Chinese economy,
  • to the fact that this expansion works only for the benefit of the Chinese people.

It was very clearly seen at the plenum that China still has a number of problems that the country's administration chose to sweep under the carpet.

For example, it the population aging problem - it is important for China to decide what to do about it. China has already formally announced that the official retirement age would be raised in 2020. China announced all those measures in advance, and they were included in the plan of the Ministry of Social Security.

Today, the retirement age is 60 for men and 55 years for women. Yet, China stopped discussing this issue - the Chinese stopped talking about it, because now is not the time for it. Unpopular social measures may lead to a social explosion, but people are raging anyway, and one needs  to replenish the pension fund.

Today, the pension fund owes $1.5 trillion to people. This is a gigantic amount, because there were no pension savings, and everyone was expecting a new age policy to be proclaimed at the plenum.

In addition, everyone was expecting Xi Jinping to talk about China's participation in the climate agreement, about environmental issues in general. However, he did not say a word about those problems, because they are not the most important problems to deal with at the moment.

It is expected that Xi Jinping's "presidential" term as head of state would formally end in 2022. One needs to bear in mind the fact that he is not the president, but the chairman of the PRC.

In 2022, he should either be replaced or kept in the office. Many investors, not only foreign ones, but those from Hong Kong, Taiwan, and other countries of Southeast Asia are watching this closely.

Xi Jinping never said a word about all that. He made it clear to everyone that those things do not affect the economy at all, because Xi Jinping follows the trends which all of China has been following historically for ages. The only way for China to maintain stability both inside and outside the country, both political, social and economic stability, is to continue to expand. Otherwise, the whole Chinese model will collapse.

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Author`s name Said Gafurov