State Run Chinese Newspaper Portends Lou Dobbs’ Greatest Nightmare

The United States has plundered global wealth by exploiting the dollar’s dominance, and the world urgently needs other currencies to take its place, a leading Chinese state newspaper said on Friday.

The front-page commentary in the overseas edition of the People’s Daily said that Asian and European countries should banish the U.S. dollar from their direct trade relations for a start, relying only on their own currencies.

A meeting between Asian and European leaders, starting on Friday in Beijing, presented the perfect opportunity to begin building a new international financial order, the newspaper said.

- From Reuters

Somewhere in New York, Lou Dobbs’ Command Center has just gone to DefCon 3.

In fairness, this is unusually terse language from a semi-autonomous state newspaper but it’s part of growing displeasure with America’s financial dominance voiced in China and throughout Asia. If such views begin to drive a move to diversify Chinese currency holdings and a more assertive push to significantly alter the world’s financial system, whether declared or not we’ll be facing a very different type of war, the significance of which cannot be underestimated.

More from the article:

“The grim reality has led people, amidst the panic, to realize that the United States has used the U.S. dollar’s hegemony to plunder the world’s wealth,” said the commentator, Shi Jianxun, a professor at Shanghai’s Tongji University.

Shi, who has before been strident in his criticism of the U.S., said other countries had lost vast amounts of wealth because of the financial crisis, while Washington’s sole concern had been protecting its own interests.

“The U.S. dollar is losing people’s confidence. The world, acting democratically and lawfully through a global financial organization, urgently needs to change the international monetary system based on U.S. global economic leadership and U.S. dollar dominance,” he wrote.

Shi suggested that all trade between Europe and Asia should be settled in euros, pounds, yen and yuan, though he did not explain how the Chinese currency could play such a role since it is not convertible on the capital account.

If you weren’t watching China before, you should be now.

~ by Kyle on October 28, 2008.