China Cooperation with France
During Macron's visit to China, China placed an order to buy Airbus planes worth CNY 137 billion. Payment was made in CNY and not USD.

When France received the payment, they will keep CNY and use it to buy products from China. They can also invest the CNY in a Chinese bank to earn interest.

There is no need for China to pay in USD and for France to keep the USD in America.

The American banks lost the chance to earn a fee on this transaction in USD. This transaction is also free from volatility in exchange rate caused by the USD.

As Airbus does not have the capacity to build the new planes, as their existing factories are busy, Airbus agreed to open a new manufacturing facility in Tianjin, China. This creates high paying jobs for engineers and factory workers in China.

It is a win-win arrangement for France and China.

This type of arrangement can also be made for other large purchases from China with overseas suppliers. China can pay in CNY and their exporting country can keep the proceeds in CNY to buy products from China.

The de-dollarization movement will accelerate rapidly. America will face a major threat in that its currency will be replaced by other currencies in international trade and as a reserve currency.
America cannot continue to print USD to fund its trade and fiscal deficits.

The value of the USD and its stock and property markets will fall over time. America will face several lost decades, like Japan had went through.

Tan Kin Lian

Add Comment

---