Yen-Yuan trade plan

The world is beginning to undermine and move forward without the Dollar. The US is clearly (and quite literally) on borrowed time.

In contemporary world the real indicator of state power is economy rather than territory, population or army, days of physical warfare are long gone, now is the era of economic warfare. Economy determines the destiny and position of states in international politics. The phenomenon of interdependence in international economy has modified the concept of sovereignty, Terms such as sovereignty are irrelevant to countries with weak economies, and sovereignty cannot be protected unless a country is self-sufficient with no dependency on any other country. One can see that leading countries in contemporary world having a strong position in world affairs are countries with huge economies at their back. Economically powerful countries Such as the United states use organizations like World bank and International Monitory Fund (Which are described by many economists as modern tools of colonization) to further their agenda and influence the policies of strategically important but economically weak countries, there is a very well known phrase in economics that aid of any kind is never without strings attached to it. One of the preeminent things that have happened at December 26, 2011 was the Sino Japan currency deal. Sino Japan deal is the beginning of direct trading in their currencies. Currently yen Yuan are not convertible and for trade between two countries need to buy Dollars that adding up extra expenses. China is the biggest trading partner of Japan, according to static’s of Japan external trade organization; trade volume between two countries was $339bn in 2010, which is expected to grow rapidly after Yen Yuan deal.

Through this deal it is first time that Chinese Government allowed any state to issue Bond in Yuan. Japan bank of international cooperation will issue Bond in Chinese market. Japan Government was interested to buy Chinese Government bond and through this deal a new door of mutual cooperation is open which is beneficial for both states. Japan Government stance to adopt China bond as foreign exchange reserve will assist Yuan’s future role as international currency. Sino Japan deal will be beneficial to get investor’s confidence to invest in China bond that give a credible boom to Yuan in eastern markets. China and Japan has long history of rivalry but they come to an agreement, which is beneficial for both states that will give confidence to foreign investor. Japan is the world’s third and china is second largest economy and the deal clearly depicts that rule of Dollar as global currency is going to end.

Full article: Yen-Yuan trade plan (Pakistan Observer)

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