China Cannot Afford to Use Its Alternative to the Dollar and It Has Become Real Obvious

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A currency becomes a reserve currency when foreigners can acquire it freely, hold it safely, move it without permission, and trust that a court will enforce a claim denominated in it. Beijing permits none of those things. Capital controls determine how much renminbi can exist beyond China's borders, and Beijing keeps that number small on purpose.....

To make the yuan a genuine reserve currency, Beijing would have to permit exactly the capital mobility that its own experience says would destabilize the system the Party exists to control. It can build the rails, and it has. It can wire in the partners, and it is doing that too. What it cannot do is fill the pipes, because filling them requires letting money leave.

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