China is considering making it’s currency convertible and thus, potentially open for trade. This blog post by Tim Collard of The Daily Telegraph (London) looks at why they are considering this, but more importantly, the frightening reason for Americans that they are in no hurry to do so.
Yes, the non-convertibility of their own currency does mean they are forced to maintain massive dollar reserves; but they are in no hurry to replace the dollar with the renminbi as a reserve currency. It would look good: but they can live with massive holdings of US Treasuries, warming their hearts with the thought that democratic (small “d”) irresponsibility is fast turning the USA into a wholly owned subsidiary of the [People's Republic of China].
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