By Timothy Alexander Guzman
China is accelerating the role of the Chinese Yuan with agreements
with Singapore that would allow “direct
trading between each other’s currency” according to
Singapore’s central bank. The Agence-France Presse (AFP) reported
that China and Singapore will cooperate on a number of agreements
that would boost economic ties for both countries.
China is concerned with its US treasury holdings worth up to $1.2
trillion after Washington’s spectacle earlier this month over its
fiscal policies that pushed the world’s economy into a
crises. “The
move, along with other agreements on financial cooperation, is
expected to bolster Singapore’s status as a leading offshore
trading centre for the Chinese Yuan, officially called the renminbi
(RMB)”the report said. “China
and Singapore will introduce direct currency trading between the
Chinese yuan and Singapore dollar,” the Monetary Authority of
Singapore (MAS) said in a statement, adding that details will be
announced separately.” China is in a
good position because it allows Singapore to invest in Chinese
stocks and bonds with Yuan’s boosting its capital markets.
The report said that “China
will also grant Singapore-based investors a 50-billion-yuan ($8.2
billion) investment quota under its Renminbi Qualified Foreign
Institutional Investor programme, MAS said. This would allow
investors based in the city-state to use the Yuan to invest in
Chinese stocks and bonds.” China is racing against
time in case lawmakers in Washington do not come up with an
agreement to raise the “Debt Ceiling” to borrow more money or solve
their economic problems. China is diversifying out of US
Dollars at a rapid pace since the 2007-2008 financial crises that
resulted in the bankruptcy of major financial institutions,
bailouts and government takeovers such as Lehman Brothers, Fannie
Mae, Freddie Mac, Citigroup and American Insurance Group
(AIG). China is also frustrated with the US government’s
backing of its neighbors internal affairs with Beijing regarding
the South China Sea. Reuters reported on October 10th, 2013
the following:
The US is also aggressively backing the Philippine government’s
maritime dispute with China when U.S. Secretary of State John Kerry
angered China’s leadership “All
claimants have a responsibility to clarify and align their claims
with international law. They can engage in arbitration and other
means of peaceful negotiation,” Kerry told leaders at the
East Asia Summit in Brunei, including Chinese Premier Li
Keqiang.
“Freedom of navigation and overflight is a linchpin of security in
the Pacific,” he added.
It is important to note that Hillary Clinton, who is rumored to run
as a Democratic candidate in the 2016 US Presidential elections,
told an ASEAN summit in 2010 that the US had a “national
interest” in the “freedom
of navigation. “ Clinton also angered China that
only proves that the US is directly intervening in a regional
dispute. Since the Obama administration got into office they
have repeatedly used the ASEAN forums for multilateral discussions
between China and its South East Asian counterparts supporting the
opposition and ignoring Beijing’s call to settle the disputes
bilaterally. The US has supported the Philippines (considered a US
puppet state) and Vietnam to counter China’s claims aggressively
resulting in numerous maritime incidents in the South China Sea and
has divided all countries within ASEAN. China is threatened
economically and militarily by the US government (See graph
below).
China is making moves to loosen the US government’s strangle hold
over its economy and its regional disputes with its
neighbors. China’s economic growth will benefit Singapore in
the long run as “Chinese
institutional investors will also be allowed to use the Yuan to
invest in Singapore’s capital markets.” The AFP
also stated that “Relevant
agencies in Singapore and China are also in discussions to
facilitate China-incorporated companies, which have received
regulatory approval to list directly in Singapore.” And
that “The
new initiatives will further promote the international use of the
Renminbi through Singapore,” the MAS
said.
Times are changing for the world’s economy. China and other
countries are in preparation for a possible US default in the
future. When can the US Dollar collapse? It is hard to
tell since the US economy is intertwined with the global
economy. But one thing is for sure China and other countries
across the planet are diversifying out of the US Dollar and it is
accelerating. That is a fact. Singapore is not taking
any chances either. “Its
managing director Ravi Menon added: “Financial ties between the two
countries have deepened considerably and Singapore is well placed
to promote greater use of the RMB in international trade and
investment in the years to come.”
The AFP report said “China’s
rise as the world’s second biggest economy has seen the Yuan take
on a bigger role in international financial
markets.” 2014 will be an interesting year for
world financial markets. What will happen when Washington is
once again on the center stage in January? Will they continue
to increase the “Debt Ceiling” so that they can borrow until the
end of time? Or will they play “Political Brinkmanship again?
Will the Federal Reserve Bank “Taper” its monetary policy by
Mid-2014 if the US economy improves as Chairman Ben Bernanke
promised or will the new Chairwoman Janet Yellen, a member of the
Council on Foreign Relations (CFR) and a protégé of Alan Greenspan
continue to print US “Fiat” currencies with low interest
rates? Many questions on the US economy remain elusive.
China has many reasons to worry about its financial future and its
sovereignty and that is a declining empire called the United States
government.
http://www.globalresearch.ca/beijings-race-to-diversify-out-of-us-treasuries