"China Wants To Ditch The Dollar" - by CWP alum ZONGYUAN ZOE LIU
Ganzhou, a landlocked city that once served as a revolutionary base for the Communist Party of China, is not a typical tourist stop for visitors to southeastern China. Spread across an expanse larger than Maryland, however, the city boasts a population that rivals New York City and an economy similar in size to Alaska.
Known as the “Rare Earth Kingdom” and the “Tungsten Capital of the World,” Ganzhou today serves an important role in the Chinese government’s overall effort to use mineral exchanges as a way to increase the use of its currency, the renminbi, and improve its pricing power in global commodities markets.
Home to the headquarters of the China Rare Earth Group — a state-owned behemoth born from the 2021 merger of three of China’s largest state-owned rare earth enterprises — Ganzhou now produces nearly 70% of the country’s rare earth mineral products, with China fulfilling roughly 90% of global demand.
Ganzhou also hosts the Ganzhou Rare Metal Exchange, where China’s renminbi currency is used to quote prices for spot trading of tungsten, rare earth products and critical minerals like cobalt that are essential to the clean energy transition.
The metal exchange, established in 2019 with the approval of the State Council, now operates as a subsidiary of China Rare Earth Group. It is China’s second mineral exchange, which was established to use the renminbi to price and trade minerals and rare earth products.
The first such exchange, the Baotou Rare Earth Products Exchange, which started operating in 2014, is jointly owned by 14 major Chinese rare earth suppliers and was explicitly set up, at least in part, to increase China’s overall role in pricing rare earth products. To that end, China also launched two renminbi-denominated exchanges — oil futures in 2018 and copper futures in 2020 — on the Shanghai International Energy Exchange.
https://www.noemamag.com/china-wants-to-ditch-the-dollar/ - BY ZONGYUAN ZOE LIUJANUARY 11, 2024
Zongyuan Zoe Liu is Maurice R. Greenberg fellow for China studies at the Council on Foreign Relations (CFR). Her work focuses on international political economy, global financial markets, sovereign wealth funds, supply chains of critical minerals, development finance, emerging markets, energy and climate change policy, and East Asia-Middle East relations. Dr. Liu’s regional expertise is in East Asia, specifically China and Japan, and the Middle East, specifically Gulf Cooperation Council countries. Dr. Liu is the author of Can BRICS De-dollarize the Global Financial System? (Cambridge University Press) and Sovereign Funds: How the Communist Party of China Finances its Global Ambitions (Harvard University Press).
Photo Credit: https://pixabay.com/users/ryanmorrisonjsy-5996221/
