Opinion: US fueling Diaoyutai dispute to protect the dollar
After the dispute between China and Japan over the Diaoyutai (Diaoyu or Senkaku) islands in the East China Sea became more acrimonious, not only has the Japanese government’s position fail to gain the support of its diplomatic allies, but Japanese media outlets have also criticized the government as the disastrous effects on the country’s relations with China have caused enormous financial losses for the country’s economy.
Meanwhile, some international media reports claims the dispute will allow the United States to profit because of the considerable liquidity flowing into the US from China and Japan, which could help the obstruct the rise of China’s financial sector at the international level.
An opinion piece published in a foreign media outlet said that the reign of the US dollar as the world’s reserve currency was the main driver behind US economic growth.
This makes it difficult for the country to tolerate a decline in the influence of its currency.
However, following the ascent of China and the increasing internationalization of the renminbi, there is now an increased sense of crisis in the United States.
This was intensified particularly on June 1, when a deal for the direct exchange of the Chinese renminbi and the Japanese yen was implemented.
The deal is an important step forward towards the globalization of the Chinese currency because it would enable Japan to use the renminbi as a reserve currency.
Subsequently, Japan, China and South Korea initiated talks aimed at establishing a trilateral free-trade area comprising the three countries, which will affect billions of people.
The free-trade area is widely considered as a potential engine for global economic growth and has amplified US concerns over China’s increasing influence over the global economy.
The United States has therefore constantly tried to stir up territorial tensions between China and Japan in the hope of hindering the progress of establishing such a free-trade zone and replacing it with the Trans-Pacific Partnership free trade agreement led by the United States, the opinion piece said.
The United States also recently launched a third round of quantitative easing, or QE3, causing the US dollar’s value to depreciate sharply.
The measure was meant to cause an outflow of liquidity from the United States.
However, due to the territorial dispute, international hot money has fled from China and Japan, while the worsening European debt crisis has caused a lot of capital to flow into the United States, making the country a huge beneficiary of the outcome of these current geopolitical developments.
A foreign media report said that armed forces were no longer the only means used by powerful countries for exploiting or colonizing other countries.
They could instead also resort to currency colonization backed by a strong economic and military power.
The United States would certainly plot against countries which want to challenge the reign of the US dollar as the global reserve currency.
Chinese economist Song Hongbing, the author of the book Currency Wars, said that the renminbi’s globalization could pose a threat to the hegemonic status of the US dollar as the world’s reserve currency, prompting the United States to exhaust all available means to harm the renminbi.
Guo Xian’gang, a foreign policy analyst at the China Institute of International Studies, said that the United States has played a key role in the Diaoyu islands dispute, through its attempt at containing a rising China and tried to obstruct the renminbi from becoming an international currency.