The Chinese social network Sina Weibo published on Aug. 24, “The service of liquidation and sale of currencies of the State Administration of Currencies of China is suspended,” according to alternative media Gnews. Then the message was removed from the site.
Then, on the same day, some internet users who apparently use ATM cards linked to the Chinese Communist Party (CCP), published that they had been denied the use of their money in dollars, according to their tweets.
The writer and YouTuber Jennifer Zeng forwarded one of the messages that related one of the cases.
“This is huge if true. This person in #Dallas says his #UnionPay card(issued by #China) was rejected by Walmart & 99 Ranch as #CCP has suspended foreign exchange settlement. I haven’t found any official announcement about this though. But someone shared this image showing it,” Zeng wrote.
This is huge if true. This person in #Dallas says his #UnionPay card(issued by #China) was rejected by Walmart & 99 Ranch as #CCP has suspended foreign exchange settlement. I haven't found any official announcement about this though. But someone shared this image showing it. https://t.co/r68F4dfhL2 pic.twitter.com/p5fAgOpxZH
— Jennifer Zeng 曾錚 (@jenniferatntd) August 24, 2020
Gnews quoted the official media of the CCP that announced at the beginning of the month that its reserves had increased during the last four months, which led it to ask the following question, “How come in the current situation where the pandemic is spreading and foreign trades and economy are contracting, Communist China’s foreign exchange reserves still increased?”
The CCP has recently launched several financial movements apparently aimed at decoupling its economy from the dollar as a currency, but this is not an easy task, and for some, it is even improbable.
To achieve this, several conditions would have to be met, which the CCP has not meet.
On the one hand, 70 percent of its economy still depends on the dollar, and for a large amount of raw material imports it requires to move its economy must be paid for with dollars.
On the other hand, international reserves in 2018 were only 1percent in yuan the national currency regulated by the CCP, which is far from being widely accepted globally, according to Foreign Policy.
Likewise, currency as an international reserve needs a safe and reliable place where it can stay for an indefinite time, but the entry and exit controls imposed by Beijing to other countries do not give rise to the required confidence, considered Foreign Policy.
The Chinese demand for dollars is enormous, annually it requires around $350 billion to pay for the raw materials and fuels it imports.
If we add to this the necessary investments for its gigantic Belt and Road Initiative, (BRI), the figure is even higher.
Given that U.S. imports of products made by companies linked to the CCP have been restricted, the $500 billion that used to come in this way is shrouded in uncertainty, it is no longer known what portion of this amount the CCP will now receive.
The strength of the dollar as the currency continues to be unbeatable, at least 50% of the value of global transactions are generated in dollars, in addition to having the infrastructure necessary to make all these capital movements a reality.