The United States' advantage in international trade is based on the U.S. dollar dominance, which often victimizes emerging markets and developing economies (EMDEs), according to two Chinese experts.
The U.S. Federal Reserve (Fed) on Wednesday left interest rates unchanged at a 22-year high of 5.25 percent to 5.5 percent as recent consumer data indicates that inflation continued to tick up. The high interest rates' impacts have been especially detrimental to EMDEs, they said.
They pointed out that as the main currency for international transactions and reserves, the U.S. dollar should be a global public good in nature. Yet in reality, although it is in the position of playing a pivotal role in the global economy, the U.S. always upholds "U.S. first," with little regard of global public interest, said Wang Qing, chief macroeconomy analyst with Golden Credit Rating International. "We know that the U.S. dollar is controlled by the U.S. Federal Reserve, which mainly adjusts the dollar circulation in accordance with the United States' own economic operation, and it would not fully consider the reality of other economies. This paradox has in reality nurtured a series of major international economic and financial crises," Wang said.
He said the U.S. is practically in a position to purchase goods from other countries just by printing more dollars using the U.S. dollar dominance.
"We know that the U.S. has had a huge trade deficit for a long time, which means that its exports of goods and services have long been remarkably lower than its imports. This kind of macroeconomic imbalance is definitely not sustainable in other economies. But relying on the global currency status of the dollar, the U.S. could directly fill in this huge trade deficit by exporting dollars, which is practically imposing a dollar-printing tax on the world," Wang said.
While it capitalizes on the dollar's dominance, the U.S. is never hesitant to raise interest rates to draw the reflux of dollars once inflation occurs in its domestic economy, jolting other economies, said the experts.
"All emerging markets have depreciated by 1.5 percent on average against the U.S. dollar (this year). The currencies of South Korea and Brazil have depreciated by about six percent against the U.S. dollar, and in some countries it was more than that. (The currency of) Thailand has depreciated by about 7.5 percent. The blood-sucking effect of the U.S. dollar and its impacts on global depreciation are indeed very strong," said Lu Zhe, chief macroeconomist of Founder Securities Co. Ltd.
Chinese experts on US dollar hegemony
Chinese President Xi Jinping held a restrictive meeting with Russian President Vladimir Putin on Thursday at Zhongnanhai in Beijing, during which they had in-depth exchanges on strategic issues of common concern.
The world is undergoing changes unseen in a century and entering a new period of turbulence and transformation, Xi noted, adding that in the face of the ever-evolving world landscape with volatility and turmoil, China has maintained its strategic resolve.
He said that under the leadership of the Communist Party of China, the Chinese people have overcome various difficulties and challenges, and are striving to promote high-quality development and Chinese modernization.
China is willing to work with Russia and other countries to enhance solidarity and cooperation, steer global governance in the right direction, jointly safeguard international fairness and justice, and promote world peace and common development, Xi said.
Noting that China's development is unstoppable and that no force can contain China's growth and progress, Putin said that Russia is willing to improve cooperation with China and other Global South countries to promote international fairness and justice, and to work toward a more equal and multipolar world.
The two heads of state had an in-depth exchange of views on the Ukraine crisis.
Xi elaborated on China's consistent position and efforts to promote the political settlement of the Ukraine issue, stressing that to deal with any major issue, it is necessary to address both the symptoms and the root causes, and to plan for the present as well as for the long term.
He said the core of the Global Security Initiative is advocating the vision of common, comprehensive, cooperative and sustainable security, and the fundamental solution to the Ukraine issue is to promote the establishment of a new balanced, effective and sustainable security architecture.
Xi said China supports the convening of an international peace conference recognized by Russia and Ukraine at an appropriate time with equal participation and fair discussion of all options, so as to push for an early political settlement of the Ukraine issue, and China stands ready to continue to play a constructive role in this regard.
Putin introduced the relevant views and positions of Russia, saying that Russia appreciates China's objective, just and balanced position on the Ukraine issue and welcomes China to continue to play an important and constructive role in the political settlement of the issue. Russia is committed to resolving the Ukraine issue through political negotiations and is willing to demonstrate sincerity and maintain close communication with China in this regard, he said.
Xi said that over the years, they have had many meetings and every exchange has been candid, in-depth and fruitful.
Xi said he is ready to stay in close contact with President Putin and work together to steer the development of China-Russia relations in the right direction, guide the China-Russia comprehensive strategic partnership of coordination for the new era to achieve steady and lasting progress, bring more benefits to the two peoples, and contribute to world security and stability.
Putin thanked Xi for his warm hospitality, saying that he is willing to maintain close communication with Xi, implement the important consensus reached between them, and ensure the full development of the Russia-China comprehensive strategic partnership of coordination for the new era.
Xi holds restrictive meeting with Putin at Zhongnanhai
Xi holds restrictive meeting with Putin at Zhongnanhai
