The noticeable shift of Western Economic power to the East could be complete by the end of the next decade with the Chinese yuan taking over the U.S. dollar as the principal world reserve currency, some experts say.
Since 2009, according to Shanghai Daily, Chinese officials have been promoting the yuan — also called renminbi (RMB) — outside its borders as a way to settle trade agreements. The result of this push has been a buildup of deposits in Hong Kong creating a thriving yuan bond market.
As China works to make the yuan more desirable to international investors, its strict domestic capital controls appear to be its biggest hurdle in economically eclipsing the United States. But many economic experts believe that China will gradually change its domestic economic policy over the next few years to draw investors. Alicia Garcia-Herrero, chief emerging markets economist at Spanish bank BBVA in Hong Kong, said that China could make the yuan appear more desirable than the dollar in as few as five years by just slightly altering its domestic economic policy.
Arvind Subramanian, a senior fellow at the Peterson Institute for International Economics, a Washington think tank, believes that as economic power shifts, China’s dominance by 2030 will be similar to the international economic dominance enjoyed by the United States in the 1970s.