Beijing is making significant moves to challenge America’s long-standing financial dominance, as a recent analysis by Sean Foo highlights. China is actively growing its Asian Infrastructure Investment Bank (AIIB) and substantially increasing its gold reserves, all while the US, under the Biden administration, tries to limit China’s access to major international lending institutions. This shift solidifies China’s financial power on the global stage.
The US Strategy to Contain China
The United States has reportedly been leaning on organizations like the Asian Development Bank (ADB) to stop extending loans to China. Similar demands have been made to the World Bank and the International Monetary Fund (IMF), urging them to reassess their lending practices to Beijing. The US even tied its approval of $4 billion in funding for these institutions to reforms in how they lend to China.
China’s Bold Counter-Moves
- AIIB’s Global Reach: China’s brainchild, the AIIB, is aggressively expanding its international influence by opening new offices in key financial hubs like Singapore and Hong Kong. This signals a clear intent to boost its global financial footprint. The AIIB has already committed a substantial $52 billion to 38 member countries, notably excluding the United States. China holds a significant 26% voting share in the AIIB, giving it veto power over crucial decisions.
- Strategic Lending: A considerable portion of the AIIB’s loans targets energy and transportation projects. This strategy could greatly benefit China’s leading industries in renewable energy and infrastructure. For instance, a loan to Uzbekistan for wind and battery storage systems is likely to involve Chinese technology and companies.
- Gold Accumulation: China has dramatically increased its physical gold imports, reaching an 11-month high. This surge is driven by both commercial demand and the central bank’s efforts to move away from holding US dollars. The People’s Bank of China (PBOC) is actively encouraging financial institutions to import more gold. This shift towards gold is seen as a way for China to safeguard its wealth, protect its economy from potential sanctions, and perhaps prepare for a future financial crisis.
The Bigger Picture
The video suggests that while the US focuses internally, China is seizing the opportunity to expand its global influence. China’s calculated use of the AIIB not only provides loans but also promotes the use of its currency, the Renminbi (RMB), and creates new markets for Chinese goods and labor. Furthermore, China’s growing gold reserves indicate a deliberate move away from dollar-denominated assets, which could potentially impact the dollar’s leading position in global markets.
Ultimately, the speaker argues that China’s well-coordinated strategy presents a formidable challenge to America’s long-standing financial supremacy.
Have a look at this Sean Foo video, ‘don’t forget to subscribe and smash the like button’.