China's Golden Yuan Strategy?

[Joe Leote]

This is my informal outline of The Golden Yuan meme (may not be accurate due to unreliable sources):

1. China will keep mainland capital controls

2. China will diversify currency reserves holding more gold and fewer Treasuries at the central bank

3. China will sponsor gold bullion banking in Hong Kong alongside London, New York, & other gold hubs

4. China Yuan will exchange for gold at floating market prices in Hong Kong and other gold hubs

China wants to hedge against US sanction risk while doing more of the same policies: export-led growth, government industrial policy, and rapidly acquired technology transfer gains. China is using critical materials as leverage in international trade disputes and geopolitical power plays.

I don't know if the so-called golden Yuan strategy outlined above is accurate at this point, or if it is going to be significant in the critical minerals chess game unfolding between the US and China via industrial policies:

America’s New Critical Minerals Playbook

Greenland’s critical minerals require patient statecraft - Atlantic Council

Joe

[Joe Leote]

This is a long video commenting on another video recently posted concerning Golden Yuan speculation:

China Says They Shut Down Gold Trading To Protect You — That's Not Why — We Had To React

When people discuss gold they often lament the generation of finance instruments by governments (government debt) and by fractional reserve banks. If governments don't prohibit finance contracts then guess what? Markets proliferate finance contracts! The government is damned if it does regulate finance because it curbs market liberty, and damned if it doesn't because debt and equity markets drive historic asset price overshoot and collapse patterns that adversely impact the real economy in a market crash. Katharina Pistor wrote a paper on these dynamics where contracts proliferate under the rule of law until government power is necessary to resolve the financial crisis:

A Legal Theory of Finance by Katharina Pistor :: SSRN

Joe