Global Currency: Dollars or Yuan?

Since 1450, there have been 6 major currency periods with the United States being the current one. USD is the currency that most countries use to trade and to do business with their neighboring countries and states overseas. They trade goods, most importantly oil, in dollars which grants the U.S economic power and advantage over other countries.  For instance, they hold the power to sanction countries that trade in dollars as they only have to stop trading with them to cause damage. For example, Iran has faced sanctions from the U.S (most notably around the year 1996) which caused massive dips in their GDP, or Gross Domestic Product (from 6.4% to 1.4%), according to the U.S Department of State. 

On the other hand, China is not too far behind the U.S in trading either. According to the World Bank, China’s GDP is about $17.7 trillion, only second to the U.S ($23.3 trillion) and third largest trading nation in the world. Even with almost $18 trillion GDP, China only accounts for 3% of the global trade as opposed to the 87% share of the U.S. 

Because of the fact that China is so close to catching up to the 1st place in world trading, China is planning on trying to change the global currency from USD to yuan to overtake the U.S in the trade race. China has already signed contracts with countries like Russia, and according to business insider, yuan is the most traded currency there. China is actively trying to put a dent in the dollar’s power over the world. The question is, will they succeed? 

I interviewed a local citizen, Mehdi Haideri, and asked him about his opinion on this matter. He said, “China is planning to become a superpower, but in the near future it is not possible because all other countries already have contracts with the U.S concerning their currency. So if they were to change it right now, they would be at a loss and could possibly lose a lot of money. I think that the U.S is a free country and that everyone is supported here, and that makes it difficult for other nations and states to beat the U.S. That’s not to say that there is no chance at all. There are countries right now that China is contacting in hopes to get them on its side. We shouldn’t forget that those countries are not stable in trading even China because morally, China favors countries like Russia because they just want to get ahead of the U.S. Otherwise, China has their own thoughts and morals and values; they don’t accept countries for how and what they are as they are a communist country. As of now, they are partnering with certain countries for their own benefits, but in the long run, it cannot last.”

At the end of the day, the U.S dollar has a lot of value in the world and in other countries. To try to change that may not be impossible, but it will inevitably be difficult for any country to try. Even if that country is the 3rd largest trading country or one that has the 2nd most GDP.