Beyond their geopolitical differences, it is in China’s interest to maintain a strong dollar against its currency, to keep the prices of its exports low and its competitiveness in international markets. In addition, China keeps most of its surplus dollars in Treasuries because they remain the safest investment instruments in the world, despite various inconsistencies in the US economy.
An example of this is the recent dispute that President Joe Biden faced with the Republican bench regarding his request for an increase in the public debt ceiling. And it is that only with the authorization of Congress, the government can meet all its commitments, including of course the payment of interest to its Chinese creditors.
The agreement was reached after a week of negotiations. It is not the first time that a US administration has faced a possible default. Although it is an unthinkable scenario in the international economy, every time this possibility arises, there is a stir in the markets and investor confidence diminishes.
For some analysts, the recurring financial imbalances in the United States, from the 2008 real estate crisis to the current bankruptcies of banks such as Silicon Valley Bank and First Republic Bank, represent an opportunity for China to strengthen its alliances with other countries, accumulate reserves in other hard currencies such as the euro or the yen, and diversify your financial surpluses to reduce your dependence on the US nation.
It is possible that these measures could have a positive impact on the Chinese economy in the medium or long term, but the deep-rooted relationship between the economic leaders of the East and the West in the commercial and financial spheres makes a drastic change in the balance of forces unfeasible. .
In this case, economic interests prevail over any conflict or geopolitical difference. None of these nations has the resources and the necessary alliances to adopt the strategies that can modify, for the time being, the interdependence built in the last decades.
Editor’s note: Celsa Guadalupe Sánchez Vélez is Director of the School of Administration and Business of the CETYS University System. follow her on LinkedIn . The opinions published in this column belong exclusively to the author.
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