The reality? China can't be trusted to have it's currency as the reserve currency, don't forget, it's a COMMUNIST Nation. And China complaining about US debt? If the US currency devalued hard, the USA is one of China's biggest clients, over-night, it's goods become much more expensive. If China wanted to play a bigger role in world economics, it would 100% decouple it's currency from the USD and allow the Yuan to be traded in a capitalist trading pit. But it doesn't since it would cripple China's industry. China would rather try to talk down the USD and get people to buy the Yuan through back-door currency swap deals to gain support.
But China can compromise to take down the USD from it's throne. A UN panel on Tuesday recommended the USD be replaced as world reserve by, what amounts to, a world dollar. Quote from Article:
"An economy whose currency is used as a reserve currency is not under the same obligation as others to make the necessary macroeconomic or exchange-rate adjustments for avoiding continuing current account deficits. Thus, the dominance of the dollar as the main means of international payments also played an important role in the build-up of the global imbalances in the run-up to the financial crisis," the U.N. said.
But the report also took aim at countries like China and Germany with current account surpluses.
While debtor nations like the U.S. are compelled to reduce imports when their ability to obtain external financing reaches its limits, "surplus countries are under no systemic obligation to raise their imports in order to balance their payments."
So the U.N. wants a system where countries would manage exchange rates within a band.Now China is threatening trade wars! You got to be kidding me, one of the world's largest exporters of stuff wants to start a trade war? It is possible, but this only re-enforces how China can't be trusted as a world currency. I really doubt China will carry through, but if it does it would have a significant impact on the hi-tech industry as it cuts back exports on terbium, dysprosium, yttrium, thulium, lutetium. neodymium, europium, cerium, and lanthanum.
Don't get me wrong, the US has brought this attack upon themselves, at it's foundation China's criticism has merit. But China isn't acting in selfless interest for the world, it wants to take over as leader. But so far, China has been all bark and no bite, lets hope that continues for the next 100 years.