More and more countries around the world are holding the Chinese Communist Party (CCP) accountable for the cover-up and spread of the CCP virus that created this pandemic. At the same time, topics like “de-sinicization” and restructuring of the global supply chain away from China have been in many discussions. Recently, financial officials from the Communist Party indicated that this pandemic accelerated and intensified “de-sinicization” that has formed in the financial field, creating an international “alliance” that rejects China and excludes the yuan currency.
The chairman of the National Institution for Finance and Development and former Vice President of the Chinese Academy of Social Sciences (CASS), Li Yang, told the media on May 9 that the CCP virus pandemic may accelerate “de-globalization,” especially the process of “de-sinicization.”
Hong Kong Economic Times quoted Li Yang: “At the beginning of this pandemic, a shortage of U.S. dollars occurred in the world,” and he believed that “this is a very terrible thing.” He said every dollar shortage in history has strengthened the status of the dollar as an international reserve currency. Shortly after the U.S. dollar shortage, nine central banks signed currency swap agreements. “There are two things worth noting, one is that the Central Bank of China is not in the agreement, and the other is that there is no yuan in this network. This is a very dangerous tendency, that is, ‘de-sinicize,’” Li said.
He continued: “At the same time, the 2.0 version of the digital currency Libra has come out recently. It is worth noting that this digital currency is denominated in several currencies but no RMB in this valued “currency basket.”
Some experts believe that the yuan or RMB has no international status so there is no question about whether it stays or leaves the currency market.
Xie Tian, also known as “Frank”, is a business professor at the University of South Carolina Aiken. He said, “He (referring to Li Yang) probably misunderstood the real value of the RMB and thought that China’s RMB had a high international status. In fact, China’s RMB is worth nothing in the international financial market because it is not even a freely convertible currency. When it is not a freely convertible currency, it is impossible for it to reserve its value, to be a reserve currency or to be used in international trade.”
Li Yang further said, “Internationally, especially in the financial field, an alliance that excludes the RMB and China is being formed.”
He Junqiao, a financial scholar from mainland China, said, “What is the big deal about the demonetization of RMB yuan? China’s RMB only accounts for less than 1 percent of the world’s currency basket. The RMB has no credit and is not even used by a few countries. There is not even $1 RMB in $100 dollars worldwide, so what is the point? He (referring to Li Yang) is downplaying the entire situation because if the world wants to decouple from China, it is not even a question of demonetization.”
Frank believes that “de-sinicization” has already started after the trade war between the United States and China last year, which accelerated the shift of supply chains. He said the CCP virus pandemic has led to a more radical “de-sinicization.”
Frank continued: “Talking from the point of view of the entirety of supply chains and of the global economy, ‘de-sinicization’ is a very clear trend and has already started long before the pandemic. During the pandemic, companies that have not yet left China have been impacted severely. For instance, Japanese and Korean auto manufacturing plants are located in Wuhan. Because other countries do not manufacture low-end products, they put these supply chains in China. Through this pandemic, they are now shifting the supply chain to many other countries.”
Frank further indicated that another reason to accelerate the process of “de-sinicization” is that the West has now seen the malign behavior of the Chinese Communist Party.