{"id":1941673,"date":"2023-06-01T04:54:01","date_gmt":"2023-06-01T08:54:01","guid":{"rendered":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/us-debt-default-could-help-china-dethrone-the-dollar\/"},"modified":"2023-06-01T04:59:01","modified_gmt":"2023-06-01T08:59:01","slug":"us-debt-default-could-help-china-dethrone-the-dollar","status":"publish","type":"post","link":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/us-debt-default-could-help-china-dethrone-the-dollar\/","title":{"rendered":"China may replace the dollar if the US defaults on its debt."},"content":{"rendered":"<aside class=\"mashsb-container mashsb-main mashsb-stretched\"><div class=\"mashsb-box\"><div class=\"mashsb-count mash-medium\" style=\"float:left\"><div class=\"counts mashsbcount\">24<\/div><span class=\"mashsb-sharetext\">SHARES<\/span><\/div><div class=\"mashsb-buttons\"><a class=\"mashicon-facebook mash-medium mash-nomargin mashsb-noshadow\" href=\"https:\/\/www.facebook.com\/sharer.php?u=https%3A%2F%2Fwww.conservativenewsdaily.net%2Fbreaking-news%2Fus-debt-default-could-help-china-dethrone-the-dollar%2F\" target=\"_top\" rel=\"nofollow\"><span class=\"icon\"><\/span><span class=\"text\">Facebook<\/span><\/a><a class=\"mashicon-twitter mash-medium mash-nomargin mashsb-noshadow\" href=\"https:\/\/twitter.com\/intent\/tweet?text=&amp;url=https:\/\/www.conservativenewsdaily.net\/breaking-news\/?p=1941673&amp;via=ConservNewsDly\" target=\"_top\" rel=\"nofollow\"><span class=\"icon\"><\/span><span class=\"text\">Twitter<\/span><\/a><a class=\"mashicon-subscribe mash-medium mash-nomargin mashsb-noshadow\" href=\"#\" target=\"_top\" rel=\"nofollow\"><span class=\"icon\"><\/span><span class=\"text\">Subscribe<\/span><\/a><div class=\"onoffswitch2 mash-medium mashsb-noshadow\" style=\"display:none\"><\/div><\/div>\n            <\/div>\n                <div style=\"clear:both\"><\/div><\/aside>\n            <!-- Share buttons by mashshare.net - Version: 4.0.47--><h2>China Could Gain Upper Hand in Global Influence if US Defaults on Debt<\/h2>\n<div class=\"post_content\">\n<div class=\"aplayer_app\" data-source=\"https:\/\/vs1.youmaker.com\/assets\/2023\/0601\/3c2e3d29-76f0-40ca-98bc-a727a02be254\/audio.mp3?length=6475149&#038;duration=540\"><\/div>\n<p>As the June 5 deadline for a decision on the U.S. debt ceiling looms, China could gain the upper hand in global influence if the United States <a href=\"https:\/\/www.theepochtimes.com\/mccarthy-white-house-house-republicans-reach-debt-ceiling-agreement-in-principle_5294634.html?utm_source=open&#038;utm_medium=search\">defaults<\/a> on its\u00a0$31.4 trillion debt.\u00a0Amid political tensions and struggles for trade dominance, the debt ceiling debate is poised to have a significant impact on the U.S. dollar, both in markets and as a global reserve currency.<\/p>\n<p>It would be a windfall for China, which aims to dethrone the U.S. dollar as the world\u2019s go-to for trade and cash reserves.<\/p>\n<p>The lack of a speedy resolution in Congress and a clear secondary course of action has already shaken investor confidence. In the event of a default, the consequences would be far-reaching for many countries. Though none more so than the United States.<\/p>\n<p>A May 3 White House press <a href=\"https:\/\/www.whitehouse.gov\/cea\/written-materials\/2023\/05\/03\/debt-ceiling-scenarios\/\">statement<\/a> noted, \u201cHistory is clear that even getting close to a breach of the U.S. debt ceiling could cause significant disruptions to financial markets that would damage the economic conditions faced by households and businesses.\u201d<\/p>\n<figure id=\"attachment_5303726\" style=\"width: 600px\" class=\"wp-caption alignnone\"><a href=\"https:\/\/img.theepochtimes.com\/assets\/uploads\/2023\/05\/31\/id5303726-GettyImages-1246891438-1200x750.jpg\"><figcaption class=\"wp-caption-text\"><noscript><\/noscript><\/figcaption><\/a> President Joe Biden shakes hands with House Speaker Kevin McCarthy (R-Calif.) before his State of the Union address in February at the U.S. Capitol in Washington, on Feb. 7, 2023. (Jacquelyn Martin\/Pool\/Getty Images)<\/figure>\n<p>President Joe Biden and\u00a0House Speaker Kevin McCarthy<a href=\"https:\/\/www.theepochtimes.com\/mccarthy-white-house-house-republicans-reach-debt-ceiling-agreement-in-principle_5294634.html?utm_source=open&#038;utm_medium=search\"> reached<\/a> an \u201cagreement in principle\u201d on May 27, inspiring hope the congressional deadlock over raising the debt ceiling\u2014again\u2014may soon be resolved.<\/p>\n<p>But financial experts and economists are still on the edge of their seats because, as they say, it\u2019s never a done deal until the deal is done.<\/p>\n<h2>Ripple Effect<\/h2>\n<p>\u201cIf the United States were to fail to pay its debts, it would seriously damage the trust that people and countries have in the U.S. government\u2019s ability to fulfill its financial responsibilities,\u201d\u00a0Baruch Silvermann told The Epoch Times.<\/p>\n<p>Silvermann is a financial expert and CEO of The Smart Investor. He says that, domestically, a default would likely result in a significant economic downturn.<\/p>\n<p>\u201cThe government would be unable to borrow money to fund its operations, leading to reduced spending and investment. This would cause job losses and a decrease in overall economic activity,\u201d\u00a0\u00a0Silvermann said.<\/p>\n<p>Like when a penny is thrown into a pond, the ripples in the international community would be even greater.<\/p>\n<p>\u201cOn a global scale, a U.S. debt default would probably cause the value of the U.S. dollar to decrease. This is because investors would no longer believe that the U.S. government can repay its debts, prompting them to sell dollars and buy other currencies instead,\u201d he said.<\/p>\n<p>Silvermann added that it would become more expensive for Americans to <a href=\"https:\/\/www.conservativenewsdaily.net\/breaking-news\/sri-lanka-protesters-demand-president-resign-in-los-angeles-new-york\/\" title=\"Sri Lanka Protesters Demand President Resign in Los Angeles, New York\">purchase imported goods<\/a> and services, further <a href=\"https:\/\/www.conservativenewsdaily.net\/breaking-news\/omicron-fears-spook-consumers-slow-economic-recovery\/\" title=\"Omicron Fears Spook Consumers, Slow Economic Recovery\">slowing economic growth<\/a>. Moreover, investors and central banks holding U.S. dollar assets may seek alternative currencies.<\/p>\n<h2>Dollars and Cents<\/h2>\n<p>Any tarnish on America\u2019s financial reputation can translate into a loss of status and influence on the world stage. This becomes particularly important when Washington uses its most powerful peacetime weapon: sanctions.<\/p>\n<p>So if the U.S. dollar takes a hit from a default or ongoing deliberations over the debt ceiling, the use of economic sanctions would be attenuated.<\/p>\n<p>With a weaker dollar, China\u2019s vision of expanding the yuan in trade and as a reserve currency comes into focus. This has been a long-time goal of the Chinese Communist Party, which it has taken consistent steps towards for years. By 2015, nearly a<a href=\"https:\/\/www.piie.com\/blogs\/realtime-economics\/who-wins-us-debt-default-china\"> quarter<\/a> of all China\u2019s trade transactions were done in their own currency.<\/p>\n<p>Moreover, the list of countries using the yuan as a reserve currency or in trade is growing. Some of these include Russia, Saudi Arabia, Argentina, Brazil, Bangladesh, Pakistan, Iraq, Iran, and Thailand.<\/p>\n<p>In Brazil\u2014the second largest democracy in the Americas\u2014the amount of reserve currency in yuan surpassed the euro last year. This makes it second only to the U.S. dollar, according to the nation\u2019s central bank.<\/p>\n<figure id=\"attachment_5166553\" style=\"width: 600px\" class=\"wp-caption alignnone\"><a href=\"https:\/\/img.theepochtimes.com\/assets\/uploads\/2023\/04\/02\/id5166553-brazil-china-1200x800.jpg\"><figcaption class=\"wp-caption-text\"><noscript><\/noscript><\/figcaption><\/a> Brazil\u2019s President Luiz Inacio Lula da Silva (L) talks with China\u2019s Ambassador to Brazil Zhu Qingqiao at the Palacio do Planalto in Brasilia on Feb. 3, 2023. (Sergio Lima\/AFP via Getty Images)<\/figure>\n<p>But Russia is a major driver behind the yuan\u2019s recent surge in global demand this year. Bloomberg Economics reported that Moscow planned to purchase $200 million in Chinese yuan every month starting in May. It\u2019s one of the few remaining currency options since Western sanctions blocked Russia\u2019s access to the <a href=\"https:\/\/www.conservativenewsdaily.net\/breaking-news\/us-debt-default-could-help-china-dethrone-the-dollar\/\" title=\"China may replace the dollar if the US defaults on its debt.\">dollar-based global financial system<\/a>.<\/p>\n<p>And while the U.S. dollar still accounts for 60 percent of global currency reserves, analysts say its strength rests on thin ice. Especially now.<\/p>\n<p>\u201cTrust and confidence in America\u2019s ability to honor its financial obligations are essential for the dollar\u2019s widespread acceptance and use in international transactions,\u201d\u00a0Chris Muller, vice president of Money Under 30, told The Epoch Times.<\/p>\n<p>Muller has <a href=\"https:\/\/www.conservativenewsdaily.net\/breaking-news\/meet-rep-cori-bush-and-her-fellow-faith-healers\/\" title=\"Meet Rep. Cori Bush and Her Fellow Faith Healers\">spent years working<\/a> in finance and market analysis. He said a U.S. debt default would erode the credibility of the U.S. Treasury Department\u2019s commitment to repayment.<\/p>\n<p>In the <a href=\"https:\/\/www.conservativenewsdaily.net\/breaking-news\/uk-may-ease-ccp-virus-lockdown-from-march-foreign-secretary-says\/\" title=\"UK May Ease CCP Virus Lockdown From March, Foreign Secretary Says\">worst-case scenario<\/a>, he believes it could cause financial markets to contract and steer more nations away from using greenbacks.<\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"<p>domestically and internationally. China&#8217;s growing economic power could be further strengthened if the U.S. fails to reach a resolution.<\/p>\n","protected":false},"author":334,"featured_media":1941674,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_mo_disable_npp":"","fifu_image_url":"https:\/\/cndimages.nyc3.digitaloceanspaces.com\/breaking-news\/wp-content\/uploads\/2021\/01\/IMG_2758-scaled-1.jpg","fifu_image_alt":"","footnotes":""},"categories":[543],"tags":[4501,5487,16789,14169,4327],"class_list":["post-1941673","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-the-epoch-times","tag-china","tag-debt","tag-defaults","tag-dollar","tag-replace"],"fifu_image_url":"https:\/\/cndimages.nyc3.digitaloceanspaces.com\/breaking-news\/wp-content\/uploads\/2021\/01\/IMG_2758-scaled-1.jpg","_links":{"self":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/posts\/1941673","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/users\/334"}],"replies":[{"embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/comments?post=1941673"}],"version-history":[{"count":0,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/posts\/1941673\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/media\/1941674"}],"wp:attachment":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/media?parent=1941673"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/categories?post=1941673"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/tags?post=1941673"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}