Yuan, Euros, & Dollars

Our on-going money war with Europe will decide our fate with whether or not we will come out economically victorious. However, we have a third party, the Yuan, making things interesting, playing both sides of the money values and reaping its benefits.

I commend China for playing their cards right and using their economic stability to balance out dollars and euros. If it came down to it, the Yuan is supposedly the most powerful currency in the world today. - Gold-Eagle

But because of it's economic/social stability, it can't rise to power. China is export-dependent on the United States and Europe, so if their Yuan value were to increase, they would not be able to profit or grow into a prosperous country. China lacks an internal market and relies heavily on their exports to different countries.

"There are people in the market today who suggest that investors buy some hush-hush secret Yuan-denominated assets to cash in on when the Yuan is allowed to float, which will make it rise against he dollar - or so they predict." - Gold-Eagle

As much as China is dependent on the US, the US also needs the China for their cheap labor. If the value of the dollar suddenly decreased and the Yuan was 40%-50% more, there would be no point to have business over there if they weren't profiting. The effects hinder both countries because for one, China's employment rate would dramatically decrease and the US wouldn't have cheap employment and profit from it.

Communist China has a goal of annihilating the US market without losing their economic status in the US markets. Even if they don't want the States' services, they still want their money. How will they accomplish their goal? They have to devalue the worth of the dollar and in order to do that, someone has to replace the United States' exports. This is where Europe comes into place, China would have to unload their cheap products onto them to make up for their losses.

How can they achieve this?

"They can sell the 316 billion reserve dollars they racked up by running their trade surplus with the US - for euros.

When the Chinese sell dollars and buy euros, the euro will rise against the dollar. Because the Yuan is for the time being still pegged to the dollar, this will increase Chinese export competitiveness compared to Europe, which will allow them to shift their exports to the 'market of the future.' US bought and paid-for productive assets in China can then be nationalized (it's an emergency, you know) and thus acquired for nothing, and can then be used to produce goods to sell to the Europeans." - Gold-Eagle

It's funny how something so simple can have such a big domino effect on the economic state of a country.