China may sometimes seem to be calling out for a new global currency, but it is pretty much stuck with the dollar, according to Benn Steil and Dinah Walker of Council on Foreign Relations.
Click here to read their latest blog post: “Dr. Strangelove: How China Learned to Stop Worrying and Love the Dollar.”
They say China’s holdings of U.S. securities break down to about $1,000 per resident.
“Any major fall in demand for dollar-denominated assets would cause a collapse in the global purchasing power of China’s massive dollar hoard,” the write.
Can’t have that. So U.S. consumers will keep buying cheap Chinese goods, and the dollars they send to China will keeping flow back to the U.S., providing cheap credit to keep the cycle going for years to come.
“Neither partner in this monetary marriage is, therefore, likely to file for divorce any time soon.”