>>20600550I'm well aware of the theory and it makes sense when you put it into an abstract model that doesn't apply to the real world
Reserve currency status results in a constant demand for USD, giving foreign countries a permanent advantage in undercutting prices compared to local industry
The problem is that China has 1.4 billion people, and there is no economy on earth that could take on Chinese demand to a large enough degree that it would threaten Chinese manufacturing
Only India has the potential, purely based on its population size, but pajeets are too stupid to produce goods on par with Chinese quality (I'm using quality as a relative term, here)
For example, the reemergence of Europe after WW2 and later Japan did not directly threaten US industry because none of those countries has the economy of scale to fully satisfy American demand like China did
Japan and Germany were competitive in the automotive industry but those are very high end industries that require a sophisticated economy, so over time their currencies rose to the point where they were not a danger to the US
China by contrast has such an enormous manpower base that they were able to fully saturate American demand for all low level manufacturing industries and wipe out those sectors from the US economy
Besides, the Chinese have made it clear that they are not interested in a yuan reserve standard, they have proposed that the USD be replaced by a meta-currency using a weighted basket of currencies from multiple countries as an international medium of exchange
Odds are they will trial this with BRICS countries, it may or may not work but it would be a much better alternative for them
