China Challenges US Dollar Hegemony, Seeks New Global Financial Order
By Ariel Noyola Rodríguez
Global Research
September 08, 2016
During the first Annual Summit organized by the Asian Infrastructure Investment Bank (AIIB) in Beijing, China has shown her intention to take over the global leadership in infrastructure investment. By the end of this year, AIIB would have more than 100 members, making it the first lending institution in multilateral loans in history, under the control of the most important emerging countries. Yet, it is expected that she makes the decision of dropping off the Dollar, as it is the only way to break away from US hegemony in international finance.
China is already ahead of the US in the race of financing infrastructure at the global level. International Finance is going through transformation, in spite of the strong resistance by the powerful American controlling power. Last year, high officials from Washington had tried to sabotage the launch of the Asian Infrastructure Investment Bank – AIIB, but failed to do so.
In fact, countries that had formerly declared their allegiance to the US government, namely Germany, France, Italy, UK, had, at the end of the day, taken the decision to join the new multilateral lending institution promoted by Beijing. President Barack Obama could not imagine that the AIIB would have got the support of more than fifty countries within a few months.
Without a doubt, China is accelerating US decline across the globe. In April 2015, Larry Summers, former Secretary of Treasury under Bill Clinton, declared that the successful call made by the AIIB represented the most dreadful blow to the US hegemony. « Last month will be remembered as the time where US have lost their role as gatekeeper of the World Economic System », he said.
Beijing is delaying its major attack against the Dollar
However, until now, China has been proceeding with the uttermost caution. As a result, the majority of G-7 countries – Germany, Canada, USA, France, Japan, Italy and UK – have hailed the launch of AIIB. Nonetheless, in spite of the extraordinary power of attraction of Beijing’s offer which reduced the influence of Washington over the Global Infrastructure Investment Finance, AIIB is holding itself back from rejecting the Dollar. And while many had speculatedthat AIIB loans would be issued in Yuan, or possibly in local currencies, to this date, all loans have been issued in USD currency.
Furthermore, we should also take note that three out of the four loans which have been approved by AIIB this year, amounting to USD 509 million, are investments which are linked to the traditional World financial institutions , built after World War II Washington’s model. In my view, Chinese investors want to make use of shares that have been invested in World Bank and Asian Development Bank, as well as of the excellent relations already established with Europe.
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