The US economy and other countries that export fossil fuels will feel the impact over the next decade or so. The energy transition might go a lot quicker than people seem to expect. Currently about 20% of global car sales is electric. In some countries it's well over 50%. China of course being one of them. And they are making rapid progress with electrifying freight as well. This is already impacting their fossil fuel imports. They still import a lot.
One effect that I think people underestimate is that while it will take a long time for all the ICE vehicles to disappear, the new ones do most of the driving. So, new EVs have a relatively large impact on fuel consumption and imports pretty early on. E.g. Chinese diesel imports apparently already are being impacted by their rapid deployment of tens of thousands of electrical trucks. Soon hundreds of thousands. That's already a third of the market in China and will probably head for well over 50% in a few short years. The EU is not that far behind.
The ripple effect that's going to have on oil trading, refinery capacity, etc. is going to be substantial. Of course current geopolitics is speeding things up massively. LNG and oil scarcity is causing a lot of issues globally and countries are accelerating moves to reduce their dependence on that.
it'll be a roller coaster for sure, but i think there are going to a lot of interesting substations and knock on effects.
China with [EVs|Solar|BESS|Turbines] will replace all of the fossil fuel countries (US, middle-east, Russia). This is probably the biggest transition in the history of mankind. This is energy production, storage and all the appliances that use electricity. After this, its incredibly hard for any other country to compete.
I dont agree with china having the same position as the FF exporters. Simply because with renewables, you export the means to produce energy rather than the energy itself. So in terms of monetary value, china will be selling alot less panels than the FF countries sell oil. And other countries can also manufactor renewables tech themselves, while with oil they couldnt materialize it under their feet
Basically i think the paradigm of the energy trade being cornered for politcal controll wont exost with renewables. Renewables are decentralized and so not controllable
China is now the world leading developer of Thorium Reactors.
The world moved from coal to oil for transport and shipping fairly quickly due to the higher energy density and significantly easier handling of liquid vs solid fuels. Using pipes and tubes was a huge labor savings compared to having people shovel coal into a hard to control boiler.
The World Is Awash With Oil and Prices Are Poised to Keep Falling - https://www.bloomberg.com/graphics/2025-global-oil-supply-pr... | https://archive.today/hkhtI - December 18th, 2025 (Control -F "Crude Price Forecasts Are Below Levels Needed for Budgets")
> China with [EVs|Solar|BESS|Turbines] will replace all of the fossil fuel countries (US, middle-east, Russia). This is probably the biggest transition in the history of mankind. This is energy production, storage and all the appliances that use electricity. After this, its incredibly hard for any other country to compete.
Strongly agree. China is replacing petrostate economic demand with demand for their clean tech products, which keeps their deflationary economy afloat, provides them soft power, and will transition the yuan to a global reserve currency. Today countries by dollars to by petroleum ("petrodollar"); tomorrow, countries will want yuan to buy "manufacturing fiat," to trade with the world's factory (China is 1/3rd of global manufacturing capacity, as of this comment). Stocks of assets vs flows of energy.
Electricity can be generated from any source (dirty + clean), but the abstraction layer of electricity will allow the grid to continuously increase the clean fuels. It helps that the cleanest is also the cheapest. Solar panels are cheap as dirt. In 1975, a solar PV module cost $128.27 per watt. In 2026 it costs $0.1 - $0.2 per watt, a thousand times cheaper. In 1975, only satellites could afford solar. Today, its the cheapest source of energy.
China will be an electrostate. Are there any other electrostates? Maybe Bhutan, Costa Rica, but they are too small.
China for sure. The rest will come as they replace the last of coal and fossil gas with anything low carbon, solar, wind hydro, as well as the necessary battery storage and transmission for energy orchestration and agility. Like Norway is already at 100% of EV sales and other countries are still close to 0%, we're simply observing a global energy transition horse race. Exciting time to be on the timeline imho.
Ember Energy: Global Electricity Review 2026: Solar surge halts fossil generation rise as clean power meets all demand growth and renewables overtake coal - https://ember-energy.org/latest-insights/global-electricity-... - April 21st, 2026
The ‘profound’ global impact of China’s rise as an electrostate - https://www.ft.com/content/013e8a27-ade5-48ed-8f2e-ffbf70cc5... | https://archive.today/J0bew - October 10th, 2025
I think new models will result in new structures, not just a switch from the US to China.
Yeah, sounds about right for this timeline.
The US has coasted just about as far as it can go on it's exorbitant privilege while failing to invest in the future.
TLDR China builds, and will continue to build long into the future, the US prospers (for now) from financialization but cannot build, nor has the will to attempt to.
China Makes AI-powered Robots Core of National Strategy: China´s 15th Five-Year Plan (2026-2030) marks pivot to innovation - https://ifr.org/ifr-press-releases/news/china-makes-ai-power...
> Frankfurt, May 05, 2026 — China has launched its 15th Five-Year Plan by placing robotics at the heart of its modern industrial system. The aim is to pivot its AI research towards physical applications with robots as main drivers for economic growth. This is a next step in the country´s strong automation development: China´s manufacturing industry already has an operational stock of around 2 million units — approximately 4.5 times more than the global no. 2, Japan. 54% of annual industrial robots installed worldwide were deployed in China. This is according to the World Robotics 2025 Report, presented by the International Federation of Robotics (IFR).
General Dynamics Failed to Build Artillery Shells for the Army - https://news.ycombinator.com/item?id=49281711 - August 2026
Wikipedia: Exorbitant privilege - https://en.wikipedia.org/wiki/Exorbitant_privilege
https://ourworldindata.org/grapher/energy-mix?tab=stacked-di...
Look closely at China, they are pursuing all forms of energy Solar, Wind, Gas, Oil, Nuclear and even new Thorium reactors (Courtesy of Oak Ridge, Tennessee) and all forms of batteries Lithium/Sodium ion they are not resting on their laurels anywhere they are willing to use anything, and are open to any solution that works.
https://www.neimagazine.com/news/china-refuels-thorium-react...
https://china-environment-news.net/2025/06/01/world-first-ch...
Renewables have to go up by 10x (or more, with electrification of all the things) everywhere pretty much in the coming decades.
They just don't have our easy-access shale fields. If it wasn't for fracking our coal percentage would likely be just as high
16% for trucks and buses
7% for aviation
4% for shipping
2% for rail and domestic waterways
25% + a chunk of the 16% (city buses, shorter distance or smaller trucks, etc) is a good amount.
https://www.statista.com/statistics/307194/top-oil-consuming...
Aviation and petrochemical use cases are unlikely to disappear in our lifetimes, but that is a small slice of today's oil demand (lets call it ~15-20% for the sake of argument), and will be the remainder as renewables and batteries eat global energy demand. ~40% of marine shipping disappears when you're not moving energy around the world, the remaining half can burn renewable energy produced ammonia or methanol for fuel. Like bankruptcy, the change happens slowly, and then all of a sudden. China now has more power than OPEC because of the facts in this comment and their vast strategic petroleum reserves.
It is understandable to say "this flywheel is spinning slowly" before it is spinning very fast, while you're watching it spool.
How China became the world’s great oil power - https://news.ycombinator.com/item?id=49238158 - August 2026
Laos went 100% electric vehicles overnight with a drastic approach [Bans Fossil-Fuel Car Imports] - https://news.ycombinator.com/item?id=49040819 - July 2026
Electric Vehicle Sales Boom as Ethiopia Bans Fossil-Fuel Car Imports - https://news.ycombinator.com/item?id=47068567 - February 2026
Norway EV sales and related data - https://robbieandrew.github.io/EV/
Our World In Data: Tracking global data on electric vehicles - https://ourworldindata.org/electric-car-sales
Global oil price stuck in triple digits. Goldman Sachs says it may stay there for years - https://www.cnn.com/2026/03/20/energy/oil-gas-prices-intl-hn... - March 20th, 2026
Electric Cars Pass a Crucial Tipping Point in 23 Countries - https://www.bloomberg.com/news/articles/2023-08-28/electric-... | https://archive.today/e8XSt - August 27th, 2023
Almost 40% Of All Ship Cargoes Are Oil, Coal And Gas - https://thelastdriverlicenseholder.com/2022/01/12/almost-40-... - January 12th, 2022
https://unctad.org/system/files/official-document/rmt2019_en...
There's a good EIA graph about halfway down on https://www.weforum.org/stories/climate-action/us-fossil-fue... that breaks it down.
The future where oil demand is so low and and will remain low even after low prices is much further ahead I'm afraid.
As always with these stats, I like to check whether that includes plug in hybrids, and it does. Those are still mostly dependent on fossil fuels, although they use less. Pure BEV adoption seems to depend on your radius from Norway: https://www.autonergy.co/blog/global-ev-adoption-leaderboard...
(France should really be doing better, after all migration away from fossil fuels was a motive behind the Pompidou/Messmer nuclear buildout in the 70s!)
Its really sad that India is pro fossil fuel, it has an opportunity to follow China's strategy.
now that it's a proven business model in the centre of the these things, of course.
1) https://octopus.energy/big-on-batteries-octopus-and-catl-tea...
2) https://mybroadband.co.za/news/motoring/648661-electric-truc...
I will be very happy to be proven wrong here over time though. New battery technology could make a big improvement. And I keep hearing that AI will give us answers to all our technical challenges and lead to an age of abundance where we all make a high income, so there's that too.
I wonder what would happen if oil demand was significantly reduced, thus reducing fracking.
Solar power is the worst, it gets more expensive every year.
Regarding batteries... It's over for sodium based batteries (the ones promising us cheap battery storage) because dry coated Lithium ion batteries are coming onto the market which means sodium batteries are an economic dead end.
For example, if every road vehicle became an EV tomorrow, global oil demand would drop from 100M barrels per day ("Mbpd") to... ~60M. And that assumes EV replacements for things we don't have EV replacements for yet, like long haul trucking. We also have avgas, for which there's no replacement, and global shipping.
But beyond fuel there's a significant range of non-fuel usages (eg industrial, plastics, construction).
There's another factor here too and that is that the oil economy props up the weapons economy. Nobody goes to war over a solar panel [1]. That sounds like a good thing (and it is) but you have to realize there are forces who like that oil drives war became war is a huge profit opportunity.
[1]: https://www.theenergymix.com/no-one-goes-to-war-over-a-solar...
Unless Jevons Paradox. Cheaper energy might mean more oil use. 1) Never underestimate the world's hunger for energy; renewables and electrification have huge disadvantages (you can't get close to the energy density of gas/diesel). 2) Oil is used for most products. 3) Even if its use declined, that would raise the price without making it less important.
https://www.statista.com/statistics/271823/global-crude-oil-...
The transition to EVs is key to the national security of many countries that currently do not have energy security like China and even most if not all member countries in the EU.
Meanwhile everyone is being confused with AI-slop.
Most decent emergency / contingency plans will have the fire department, police or whatever local group show up at one or two designated gas stations to provide power, or require these stations to have on-site emergency power.
Because the Russian government is still telling themselves they can win and don't even bother trying to negotiate with Ukraine but instead the USA, this must not be the case.
this is just nonsense.
https://en.wikipedia.org/wiki/2025_Iberian_Peninsula_blackou...
while traveling i got caught up in this. no restaurants, no credit cards working, no grocery stores, no cell connection, no navigation with phone, no gas station. the goddam list goes on. fortunately this was less than 16 hours.
Everywhere else, gas stations aren't open if there's no power because nothing works, not even the cash register.
But I'm starting to see the uni freshman libertarian vibes here having been there once myself.
lol. i see. gas stations were closed since pumps were out. similar story with other facilities. luckily, gas station snack shops accepted cash, so buying some water/snacks was possible.
cash is of no use if facilities are not open. now that everything has been spelled out, i'm sure you are able to comprehend ;)
Meanwhile, those with solar panels not reliant on grid-tie, they can continue to charge their vehicles.
Buy a bicycle.
https://www.nj.com/news/2012/11/sandy_gas_ration_12_counties...
And we do have all kinds of disasters, but the state not only effectively intervenes, but also supports the aftermath and reconstruction. In America there are some crazy examples of towns just being left straight out abandoned afterwards, because tehre's no such thing as government reconstruction support.
But I bet there would be a lot of bicycle and vehicle theft going on, in such an event.
Solar panels and home battery storage. This is also going to seriously screw over electrical grid and especially powerplant operators... residential will, at least in suburban and rural areas, not need a grid any more except during prolonged phases of low solar yield.
This is such a perverse and anxious fear imo
Alternatively, even outside a cyberwar scenario, bad weather has been shown to take down power grids for entire regions for days, sometimes weeks.
https://en.wikipedia.org/wiki/Colonial_Pipeline_ransomware_a...
https://shippingtelegraph.com/shipping-news/adnoc-reports-15...
Where I live, we have typhoons which depending on the direction they arrive in can result in all the gas stations being out of gas for 2+ days. Meanwhile the grid keeps on ticking.
> bad weather has been shown to take down power grids for entire regions for days, sometimes weeks
Once again, as someone who actually lived through those scenarios multiple times, when the gas pumps go down you're usually shit outta luck on getting gas.
When the grid goes down for days, the gas you have in your gas car + any random fuel tanks you have in your garage is what you have. Don't expect anything else unless you plan to take it at gunpoint.
For example, a president of a certain country threatened to make a "power plant day" in another certain country.
That is of course, one of the big problems of 'going green' - electricity production is low hanging fruit and understood by the general public.
When that's 'solved' (solar, wind, geo, nuclear), how do we solve the other 97%?
Oil really isn't going anywhere. It will be a slow tail, perhaps too slow to stop emissions.
The euro is in a much better position to be adopted as an alternative, but its share of global reserves has been flat at around 20% for years.
https://data.imf.org/en/news/imf%20data%20brief%20march%2027
So I think we're headed to a future where no currency will dominate. This is probably also why the dollar's decline doesn't have any clear successor filling the vacuum. If anything, countries are accumulating far larger stores of gold. I expect this is also why BRICS is having difficulty creating their own trading currency. No countries can, or should, trust other ones which complicates matters greatly.
That's a misleading statement. First of all at the beginning of the 20th century the British pound was clearly the global currency - where a lot of the international commerce happened. Then towards the 1930s and later on the Dollar took over that role. But that role carried much less weight back then - globalization was still in its infancy and a "global reserve currency" as we understand it today simply didn't exist back then. Right now some Dutch pensioners money is invested in American, Canadian, Australian, German, etc. companies. And the parts for most consumer goods are coming from all over the world. Pre Bretton Woods basically none of this existed. This global financial system we speak of today is unprecedented and only exists since the late 70s - where most countries abandoned their currency controls (apart from the US and CH which never really had them).
There is excellent research in "currency diversity", start with Prof B. Lietaer
If a single country's currency is the global reserve currency, all you're finding out is whose thumb you're under.
So for instance yeah the US only has about 1PE (Peak Elon) of gold, but the entire global level of US reserves are only about 5PE!
Did you read the article? It seems that may be changing.
In any case, moving from USD -> Yuan would pose the same risk as people may perceive with USD today.
Having a single currency controlled by one nation is too risky.
Chinese currency policy is broadly about controlling their domestic population not about foreign policy. Between keeping their domestic manufacturing industry going and keeping their more affluent populations power in check you’ll find most of the motivation for what they do on currency policy.
This move gives one less reason to allow a currency transaction and thus one less way for domestic manufacturers (and importantly their management) to get around those capital controls.
As European Chinese business increased that became more important and Duetche is dominant in fx, being able to handle effectively everything now means European businesses won’t complain either.
The Euro is only 25 years old: it would be pure folly to make the "reserve currency" something that recent.
Then... One country of the eurozone already partially defaulted on its public debt (Greece, in 2015). And France is running an insane deficit: so bad that there are now talks of the International Monetary Fund taking control of France's public finances. France had to raise the yield on its debt to its highest level since nearly 20 years. France cannot reach the "only 5% of GDP" in yearly public deficit, on top of an already insane public debt: it is snowballing and the only outcomes are going to be miserable for the people (and for the EUR).
An economist, before the EUR began circulating, explained by which mechanisms the EUR would lead to Spain, Greece and then France default on their public debts. That economist explained how the EUR would lead to "too many secondary houses in Spain" and "too many public servants in France". When Greece did default on its debt, that economist said: "I was only wrong on the order on which these countries would default".
One would be crazy to make a reserve currency a currency that's a mix up of countries that have different productivity and different fiscal laws.
The EUR is one of the worst currency ever conceived and it could turn out to also be one of the shortest lived currency.
The spread between France OAT and German Bunds is less than 100bps.
The French annual budget deficit is lower than the projected US one.
No, and with absolute certainty not because of the second houses or public servants. That's armchair economy talk from someone that got one predictable thing right once.
Look at Michael Burry (the 2008 bubbly guy, whatever his name is). He keeps screaming "bubble" every once in a while, never got anything right again.
Let go.
The part relating to France is the usual small-state BS that has thoroughly corrupted modern "economics". France's problem more is its power generation, they rely on nuclear power, a lot of their fleet is noticeably aged and desperately needs replacement, but such replacement is incredibly expensive. On top of that, French military expenditure is ridiculous, they still dream of being an empire, maintain nuclear weapons and aircraft carriers, that make sharing vessels or aircraft with other European countries a pain - as evidenced by FCAS collapsing, the French wanted to use us Germans as paypigs for their pet project suited to carrier deployments.
Maintaining control over capital flight from china, for example.
Here is one hint. The reason why currencies like the Spanish dollar or Dutch guilder became standards were primarily questions of prestige and minting quality as you held those currencies in your own possession. But everyone could recognize a guilder and so when dealing with a foreigner, it was easier to have them.
In that type of environment, being a global export power meant that you were a global gold issuer because you sold your goods to the rest of the world, got their gold (or silver), melted it down, and issued your own stamped gold or silver coins, that circulated all over the world.
If that is your mental model of foreign trade today, then please read a bit further in your history books, because we live in the world of non-convertible fiat money. This means that when China sells $100 of stuff to America, it doesn't get to take that money home, the money is kept in an American bank account, with the name of that chinese seller as the beneficiary of the account. It's a non-convertible currency. A dollar is always a dollar, China can't melt it down and convert it to a Yuan.
So now, to be the reserve currency doesn't mean that your specialized minting tech is being stored in central banks all over the world, it means that central banks all over the world have deposit accounts in your banking system. And that can only happen by being the world's largest importer, the exact opposite of the situation in the age of the Dutch trading empire. Your entire analysis is backwards.
while Yuan usage in trade will reduce the US influence, the amount of assets held in dollar nominated investments is so so much bigger, and this will very slowly change if it will at all.
Prior to that, people might have talked about the pound as if it were a reserve currency in the same way the USD is today but, as you say, actual foreign reserves were based on gold.
It seems likely that the dominance the US has enjoyed in the recent past will diminish somewhat as other blocks with larger population bases catch up on the technology and industrialization fronts, and eventually start flexing their industrial might to create peer-level militaries.
The US' barrier to exploitation was on the gold clause. If we printed too many dollars, then other countries could do a gold call with the increasingly worthless dollars, get valuable gold in exchange, take the currency out of play, and the issue would be fixed. So punishment and self interest in a quite well designed system, kind of. The problem is we just printed a bunch of money anyhow and then when France decided to make a gold call with their reserves, we shrugged, defaulted, and just broke the agreement.
So this started the modern economic era in 1971 where currencies became completely detached and free floating. At that point about 85% of global reserves were USD. Countries began rapidly dumping the dollar and USD inflation began skyrocketing. In 1980 inflation in the US was at 13.5%! This era continued til around around 1990 with the USD falling to 47% of reserves, but then in 1991 the USSR collapsed leaving the US not only as the sole 'king' of the world, but also to former Soviet nations dollarizing once the dust had settled. This continued up til 2001 (USD at 72%) when there was both the dotcom bubble and the clear rise of China and Russia as global powers. We've now been on a steady decline since, with the USD currently down to about 56% of reserves.
Originally, yes. The US dollar did become a reserve currency because because of the circumstantially huge negotiating power of the USofA, however, as it stands now, the negotiating power is dependent on the dollar being reserve currency. The US is running on a consistent trade deficit, which is supported by the dollars covering economic growth outside of US.
When self-supporting systems are thrown off-balance, the sign in the feedback loop tends to reverse.
It is becoming obvious for gulf countries that US military protection is worth nothing.
From what I hear, what Trump did with Iran was burn through the US stockpile of certain fancy special-purpose wepons you're really only meant to use to punch a hole for your conventional forces to enter by. Trump is not willing to send in those conventional forces, because many of those personel will die. Trump may not care about the lives of the US personel per se, but with the mid-terms coming up he will care about the impact of those deaths on the election result.
Also: Gulf Wars I and II had a lot of build-up and prep, moving forces into the area; this was diving straight in because someone (my Israeli namesake) flattered Trump's ego.
Now I also think it's not even controversial to say that drone warfare is radically changing the nature of engagements. I don't believe the US could take on present-day Iran, owing to Iran's production of militarily relevant quantities of cheap and good-enough drones; a saturation attack can drain the defensive capabilities of warships, and while the exact performance is classified, a slow upgrade cycle would probably allow a saturation attack to overwhelm the *sensor* capabilities from not too long ago.
Laser defence systems may change that, but those aren't all-weather solutions, and the sea is the exact worse case for this. And I don't know if anyone's thinking about saturation attacks with submersible drones.
So, yeah, it could happen to the US, slowly, over time (it already is). But nobody wakes up tomorrow and says they no longer want USD. Where are you parking the money, yuan?
But the reality is that financial markets don't really have a soul, and just care about economics. By all accounts, the American economy is doing excellent right now and dollars are still in heavy demand.
Overall and overtime, that will weaken demand for dollar and what kind of trades other countries are willing to enter.
Depends what happens tomorrow
Holding only Yuan isn't necessarily going to save you from what's coming.
I completely understand the growing need to reduce the US dollar dependency. But these drawdowns should happen in an orderly fashion, with due consideration to addressing issues inherent in the old global financial order.
Clearly, in hindsight, being completely dependent on a single currency was one of those issues. It would be folly to replicate that environment with a different currency.
If it was some rounding error they wouldn’t have bothered spending money to set it up and get all the clearances.
(and yes, it does not mean that the US is entirely without options to hinder China trade, just makes things harder. In this case, a lot harder)
Indeed, it also acts as a counter balance/hedge against the US's demands in the future.
The problem for Europe is simply that we need to trade with both sides fairly openly or our entire economic model collapses - We are massively dependent on US technology and Chinese industrial capacity - too dependent frankly.
The bailout, July '46 - https://en.wikipedia.org/wiki/Anglo-American_loan
Loss of India (the empire's real money tree), August '47 - https://en.wikipedia.org/wiki/Partition_of_India
FWIW, "dismantled" generally implies a personal outside actor, with the intention and power to take things apart. Vs. the British Empire crumbled mostly because Britain's & Europe's relative power / prestige / image, post-WWII, were just smouldering ashes of what they'd been before WWI. That had obvious feedback loops with ambitious "native" leaders, nationalistic memes, and the just-won "moral crusade" to liberate Europe from evil Fascist occupation.
EDIT: The post-WWII revelations & condemnations of Nazi atrocities, plus how well the "yellow" Japanese had done against European/"white" powers, were pretty much fatal to (then prevalent) meme of white people enjoying "natural" moral and military superiority over non-whites. Which meme was an important foundation stone of most of the Empires which crumbled in the decades after WWII.
I don't own and dollars and I have no plans to keep dollars now or in 10 years. I own some stock, mostly total world ETFs (traded in EUR, but a significant part of their holdings is obviously American). So does it really matter?
But this is yet another indicator of the loss of soft power, which is much farther gone than, I'd say, 90% of Americans realize.
The supposedly smart people in the tech industry should be alarmed by the loss of soft power. A lot of tech revenue comes from overseas, but if US technology is seen to be the tool of an unreliable, belligerent, corrupt, authoritarian government, that revenue will evaporate, and it will happen faster than, for example, fundamental international finance changes. And yet these supposedly smart people have lined up behind our government.
For some people in Europe now, they think about whether the thing they are buying/subscribing to is in the US or owned by a US company in a way that simply didn't happen in the recent past.
LBH PRC not dumb enough to dig itself into Triffin deindustrialization hole US has. IMO Yuan positioning itself to be better than a reserve currency, it'll be premium currency for PRC tech stack (everything do be primogem) once PRC overtake west in critical strategic goods - ultimately, whoever controls discounted society sustaining tech / commodities stack long term controls payment preference. In meantime, PRC more than fine USD continue it's decline into debt serviced casino where somehow now house net loses until US inevitably have to debase/inflate away leaving others holding bag. There's really no alternative scenario (i.e. default) for USD at this point. Downstream of that is FX re reevaluations etc, i.e. PRC nominal > US nominal is not going to take years, is not dependant on PRC vs US growth, in the end it will take a few months of FX swing outside of either party's controls.
That is what PRC is increasingly capable of offering, except on controlled / close loop, bilateral basis (i.e. panda bonds). PRC is offering near complete discounted tech stack for modernity (now including power+storage, still catching up on semi and commercial aviation). But they're not going walmart reserve, they're costco membership premium, not everyone gets the privilege of buying premium yuan, only validated parties get special swap arrangements. This has nothing to do with citizen Liu from Shanghai having capital controls.
The key thing to understand is system not limited like system competing kind of kind, one take over other, system very well be different reserve/premium models that coexist but antagonistic towards each other, i.e I argue PRC _WANTS_ to hold on to reserve plumbing while PRC strips out all the privilege and saddle US with only exorbitant cost. Like half the reason US military capitalization has gone to shit in the last 10 years is because US debt servicing. US hooked on debt which reinforces money printer addiction. Meanwhile PRC looks to maintain their "premium" currency route with none of the downsides of triffin / deindustrialization etc from being liquid reserve. PRC doesn't have to be sole reserve replacement, they can be competing reserve with less structural downsides that increases burden of USD reserve into albatross, it's less about yuan winning (and it may) but making sure US bleeds.
Hey. Don't.
It seems hard to say when that would change.
I also wonder how much political backing a bank needs to offer a service with the implications towards the status of an allied currency as reserve currency status - small as it may be for now.
Example: China holds the most foreign reserves. They are a natural world bank whether you want to call them that or not.
The US has oil and trade dominance, the USD is tied to petrodollar, aircraft sales, weapons, etc. and SWIFT - so that makes the US a kind of world bank in practical terms.
But what does Germany bring to the table? Energy? It seems to me that Russia, Iran, or even Mexico would be next in line considering the reality of trade and international finance. Why Germany?
However, its foundation was laid decades ago in the ruins of Western Europe, where financial and intelligence power combine to rule over the Western world. The immense wealth was but a mundane by-product that corrupted the mind.
Fast forward to today, it takes a lot of effort to reverse the trend and remake the US into an industrial superpower.
The free influx of money, and particularly investor money that gave the US an evergreen advantage will seize. Slow at first, then more and more as time moves on.
So this "reserve currency" status is a great burden to US industry, which is why China has created a web of laws that effectively make it illegal to be a reserve currency. The entire east asian bloc has industrialized based on an export led growth model -- that is, exporting more than they import, and thus being accumulators of other nation's currencies. It's not that they need to accumulate dollars, they just need to accumulate some other country's currency, otherwise it's mathematically impossible to run a trade surplus.
A lot of people don't understand this distinction between positive and negative -- e.g. accumulating the currency of other nations and other nations accumulating your currency. These people hold to what I call the fallacy of "the equality of all good things". These are the same people that argue for a "strong dollar" and also "strong exports", when actually these are opposites. I think of this as a form of tribalism, where the analysis is limited to "our guy good, their guy bad. X good, Y bad".
Such people are resistant to trade offs, e.g. you get the advantage of cheap consumer goods by being a net importer, but you have the disadvantage of losing jobs and industries to those nations that are willing to have expensive consumer goods for their populations in order to export more and import less.
In any case, continuing with lists of fallacies, we can say that America having a "strong economy" has little to do with its reserve currency status. Rather, it needs 1) a large bond market 2) investor rights protections 3) a legal framework allowing foreign capital inflows and outflows, with little friction. 4) A relatively stable currency.
To see how important this is, take the example of Russia, which decided that it will sell its oil to India by accumulating rupees. That's great, there was much celebrating "multipolarity" but the fact of the matter is the Rupee has lost over 20% of its value (in dollar terms) since Russia started accumulating it, and India has laws blocking Russia from selling its rupee holdings for other currencies, it can only use those Rupees to purchase Indian goods and take them back to Russia. So now Russia has tons of rupees it can't use except to buy Indian goods, and has started requiring India to pay with Quatari Riyal, as Quatar as more investor friendly laws. Also, there is not that much you can buy with Riyal, when you have two hundred billion dollars of value a year you want to park in some foreign jurisdiction, Quatar just can't absorb that. China isn't willing to accept it. India will accept it but not let you take it out. Where are you gonna put it?
So we see, we have already left the world of "America declining! The Dollar is collapsing!", because like it or not, even though America has tarnished its reputation of respecting investor rights, it's still miles ahead of any alternative when you need to park overseas earnings.
China blocks foreign capital inflows. Europe suffers from all the problems that the US does and even moreso as they are now openly seizing foreign ships and the bank accounts of private citizens - for example freezing bank accounts of people with Russian sounding last names - and Europe has even more barriers to moving money in and out.
So in which jurisdiction will you park your overseas earnings if not the US?
There is no alternative. No alternative is even beginning to appear over the horizon.
While I am holding forth on all these fallacies, another one is what I call the "balloon theory" of trust. This is the assumption that because the US, which used to be a high trust, investor-rights respecting nation, but has begun losing those investor rights credentials after seizing the sovereign assets of Afghanistan, Iran, Venezuela, Syria, as well as other official enemies - that because of this, some other nation must magically arise that will have that reputation for respecting foreign investor rights. E.g. that trust is a balloon, and if you squeeze one part of it, another must by necessity expand. This also comes from tribalism, e.g. the view that if your enemies suffer that you must benefit. But trust isn't like that, it could just be that as the US begins to look less attractive, then no other nation will take its place, and this will create real problems for the export-led growth economies in Asia, as they need some nation whose currency they can accumulate in order to run the trade surpluses needed for them to maintain domestic employment.
The US is in for a hard couple decades ahead given they aren't leading innovation, manufacturing, finance, geopolitics, and even their military power is now in question.
At least they owned the libs.
Not to say there isn't war, but they're small wars with a million deaths being a big one.
More people died in Second World War[1] than in all wars since then combined. If not for the Russian Civil War and WW2, the same would probably true for the Great War.
War is terrible, but the fraction of people who died in wars the last 75 years is substantially smaller than the 75 years before that and I do think that is worth celebrating. I am not confident this will hold for the next 75 years
[1]: https://en.wikipedia.org/wiki/List_of_wars_by_death_toll
Do you think that maybe the reluctance to engage in large wars over the last 75 years is a benefit of the nuclear deterrent rather than political ideologies, or world view narratives, or hegemons?
Just kind of noticing that the 75 year figure you put out there kind of dovetails nicely with the existence of the nuclear deterrent in multiple global arsenals.
Obviously, I believe in the nuclear deterrent. Just wondering if there are other people out there willing to admit that it has been the best tool in mankind's toolbox for obliging people to talk to each other rather than go to war.
The problem with weapons is that usually weapons end up being used. And with the US now no longer working against proliferation the risks are going up.
99% of us got to grow up without the fear of military violence, and go about our lives.
More and more it feels like a nation's kWh throughput is the new metric to track its global influence in manufacturing, industry, and financial services. In other words electric power now equates to global power.
Puts a hard floor on nations with strategic nuclear deterrents - they can never fall below a fairly high threshold, no matter how much of a "Security State Zombie" their national economies have become.
[1] I'm not 100% sure it's all me joking anymore.
In living memory, has this not been the case? Oil's use as an energy source is far more meaningful than its material use.
Part of why I always questioned why calling a country a "gas station" was supposed to be insulting. Yea, that's the main ingredient of being a world power.
Unionpay for example, allows clearing directly in Chinese Yuan and most Chinese native merchants accept them.
Waiting for the dollar to collapse in the next 100 years and see what it brings to the political arena whether it's for better or worse. I am not afraid of the devil showing off its ugly face, whoever the new devil may be.
Even the UK is spending a lot to upgrade their embassy in Beijing.
- https://fortune.com/2025/10/08/deutsche-bank-and-jeffrey-eps...
- https://www.reuters.com/sustainability/boards-policy-regulat...
Edit: credit LarsDu88 for correcting me on its age. I originally stated the idea was very old (2.5k years) but actually its a recent idea based on an ancient conflict between Athens and Sparta
The Spanish-American war was closer to the USA opportunistically feasting upon the remains of the fallen empire (The British already overtook the Spanish in terms of power).
It's hard to pinpoint the fall of the Spanish Empire. But it's even harder to point out military action between Spain and Britain (undoubtedly the rising star in the next centuries). There is the big war of Spanish Succession but that's more opportunistic and more like a major civil war that spilled out of Spain and across Europe.
Lots of war between Spain, HRR, France and other parties. But strangely not so much with Britain....
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In both Spanish and British cases, the real enemy the whole time was just a boatload of debt.
But quite beyond that, I'm just saying that the Thucydides trap is not an iron rule. The first place I looked was a counterexample and I'm sure there have been many more over the centuries.
No war was "needed" to settle who was #1, it was clear that we (the UK) simply couldn't maintain the empire as it was and we definitely couldn't have fought the US.
We went into WW2 the clear naval power in the world, We exited it in the #2 spot utterly broke.
In less than 4 years the US produced enough ships to eclipse our navy and did it while also producing ridiculously vast amounts of equipment for themselves and their allies across every sphere.
No one with a brain in our foreign office would have even contemplated poking that (and realistically while the US has at times been a questionable ally on the whole in that era they were a reliable ally).
In that kind of total war the side with the larger industrial base wins the war of attrition.
It doesn't matter if the enemy sinks ships if your production rate exceeds the sink rate on a sustained basis you win (somewhat related it's also why naval strategists have been sounding the clarion call about the fact that China now makes more than half of all global shipping, the US is somewhere around 1% - those peacetime yards/skilled works transfer over in a war).
The US did that, they won the war (or their part of it) in the factory lines/mines as much as they did on the actual front.
War is costly, so (in the absence of bargaining frictions) game theory suggests that an agreement can be reached that leaves both parties better off compared to going to war.
Its claimed to be an old idea, but its actually only recently become popular
It sounds plausible, but if it is this old there must be a long list of examples. What are some of them?
It is odd to see a single country being repeated at different times as the "incumbent" power.
The latest example in the list shows "UK and France" as incumbent power and Germany as rising for the 1990s - present.
The US is only listed for the 1940s - 1980s as incumbent, with Japan and Soviet Union as rising.
https://www.hks.harvard.edu/faculty-research/policy-topics/i...
>Xi has referenced Allison’s term before. In a speech in Seattle in 2015, Xi said, “There is no such thing as the so-called Thucydides Trap.” And in an October 2023 meeting with Senate Majority Leader Chuck Schumer, Xi said, “The ‘Thucydides’ Trap’ is not inevitable, and Planet Earth is vast enough to accommodate the respective development and common prosperity of China and the United States.
I switched the link to Harvard.
Unless you can have a super intelligence that can monitor every aspect of everything all the time to ensure optimal decisions. Hmmmm...
https://www.nytimes.com/2023/08/15/business/china-youth-unem...
https://www.nippon.com/en/in-depth/d01203/
https://www.reddit.com/r/dataisbeautiful/comments/1pedov5/oc...
also there are salary paycuts for people who already have work, my Chinese clients tried this, but not gonna accept it, I will rather lose such client than lower my rate, I am losing money by not increasing my rates over many years already despite huge EU cummulative inflation and EU salaries growth
by my experience visiting country after almost 10 years last year just by looking at salaries, restaurant prices, real estate prices/rent their economy seems to be stagnating in last 10 years, restaurant meal cost pretty much same as 10 years ago, same goes for entry level salaries like waitress, cook and other you can see in street
they are getting stronger overall, though doesn't seem like middle class is benefiting from it, my CN family bought apartment many years ago and they would have problem to sell it for same price, let alone make any profit on it
Also 30k USD is a lot of money everywhere except for in the US
But its relative GDP growth has been higher than the US for decades, is higher stil and is probably going to stay higher for years:
https://ourworldindata.org/grapher/real-gdp-growth?country=U...
If you look at absolute numbers (https://ourworldindata.org/grapher/gdp-worldbank-constant-us...), it seems likely that China will surpass the US economy pretty soon (they're a lot more people though, so per-capita is much worse).
Personally I think its most likely that chinese GDP will be larger than US GDP within 2035, but that the median citizen is NOT going to catch up to US standards in the next 50 years.
And their whole society will run into the exact same problems that many western countries are dealing with already (increasing fraction of retirees), so I'd be very careful with extrapolating their currently superior growth rate past 2040 or so.
The USD hegemony isn’t because of oil, it’s because everyone wants dollar-denominated assets. Treasury bonds, US real estate, US equities, etc. Possibly Chinese exports could soak up some of the yuan demand?
how did you get to see them? that must be a very interesting story.
Project 2025 wasn't really secret but it wasn't in the public consciousness until about a year later https://trends.google.com/explore?q=project%20202&date=today...
China also has a bunch of political philosophy nerds that crank out wonky policy papers. I keep finding references to this one by Wu Bikang, https://www.rmlt.com.cn/2014/0403/253621.shtml
I'm still very bad at Chinese and I don't assume that I understand that paper well, even with translations, but that paper clearly interprets the Thucydides trap very differently from how it's discussed here.
I absolutely do not have a solid grasp of the full works of Mencius and I have fairly anemic knowledge of the derivative works but I'm fairly sure it's not just a simple euphemism.
My read of the idiom is that Chinese political philosophers claim that the basis of Western political philosophy is the balance of power between hegemons and the basis of Chinese political philosophy is the concept of the righteous rule/mandate of heaven.
His implication seems to be that Western nations are held together primarily by force whereas the CPC primarily maintains power by serving the people.
We can focus effort on maintaining this balance...but doing that requires power to be used. And just like that we are back at step one.
We can communally build up trust to such a high level that everyone can act independently to maintain balance, but this naturally creates a situation where the more trust there is, the bigger the payoff for the one who breaks it. Essentially the prisoners dilemma.
We can just not fight. There is enough room and resources,we can get more of them and build more efficient tech, and we are all more alike than different.
Maybe you argue that we are human and intelligent, so we can override this inconvenience with a system of our own design. My response would be "Sure, put your guns down and burn them, I won't stop you."
Again, it's an unstable equilibrium. Power on the other hand is dramatically more stable.
We don't kill weak links in our population just like mother nature intended and keeps doing left and right everywhere all the time, a good chunk of this forum would not pass those harsh and often random tests yet its/ours added value is non-trivial and surpasses any additional effort by society (at least I like to think that).
'Everything good in this world is kindness'. I have yet to meet a person, situation or story where this would not apply.
(To be clear, not targeting you personally here, but targeting the rhetoric and fallacy)
If everyone else is defecting and you can cooperate with a few people, that's slightly better for you. Hence we have high-trust and low-trust societies, gatekeeping, etc.
Yes, I’m just throwing some bs numbers around but IMHO things will have to make sense eventually when US can’t just print infinite dollars without crashing its value and Apple can’t just sell iPhones to the entire planet due to wars and trade barriers that are becoming the new normal.
The US is a huge whopping exception to this strong correlation between the balance of trade and currency strength. US exceptionalism is usually wrong, but in this case, the US dollar being the 'reserve currency' of the world is an incredible boon. The US has been able to sustain a huge trade deficit for decades without sky high inflation (you think it's bad now, it's nothing). In fact, foreign goods keep getting cheaper and the US dollar and services keep getting more valuable. A lot of this is because foreigners are willing to keep their savings invested in dollars (stocks & bonds, including the magnificent 7) rather than selling off their dollars to buy e.g. Chinese goods.
Also note that the tech companies make up a small portion of imports/exports.
But.. If trade restrictions (or security concerns) make it harder for the magnificent 7 to make money abroad, their profits will go down and there could also be an outflow of capital that puts inflationary pressure on the dollar, just because US stocks and bonds are less attractive - the trade deficit increasing would also contribute a bit, but it would be a much smaller effect.
An economy being propped up by foreign capital is not just a US phenomenon, the Asian Financial Crisis of 1997, Turkey 2000, Mexico 1994 - these crashes all were cause by sudden capital outflows. The proximate cause was a short term arbitrage trade, rather than those currencies being in extensive (structural) demand.
This concern is also why China doesn't let foreigners invest directly in Chinese companies. You can only buy weird derivative certificates that trade on a Hong Kong exchange and are subject to tight capital controls if need be.
Things like a domestic tax on imported goods/services (also called tariffs) are unlikely to lower the trade deficit unless there is already an industry domestically to absorb the demand.
You should look at where most of the compute of the world is physically located. You might have a shock.
"It's hard to argue that the yuan isn't undervalued. As the International Monetary Fund noted in its country report published in February, China's external position "is assessed to be stronger than the level implied by medium-term fundamentals and desirable policies." The yuan has nonetheless fallen in real terms due to China's low inflation.
Indeed, the renminbi has depreciated in real terms four years in a row, registering a cumulative 14% decline since 2021, according to IMF economists. They estimate China's real effective exchange rate could potentially be up to 20% undervalued.
China watchers Brad Setser and Mark Sobel, both former U.S. Treasury officials, go further and say the yuan is probably undervalued by as much as 30%. Setser has long argued that China's official balance of payments data understates the country's real surplus and that customs data is the more accurate barometer. By that measure, the trade surplus would be a percentage point of GDP wider."
https://www.reuters.com/markets/europe/chinas-yuan-is-underv...
they are called mao (1/10th RMB/CNY) and kuai (CNY/RMB) in China
but mao pretty much dont exist anymore now with electronic QR payments everywhere even in food stalls, heck even beggars have QR codes and fen is for many many years more like some monopoly money papers
It's in Japan that it's all just Yen.
I don't think I've ever used anywhere in street, shop or restaurant yuan/renmimbi, at least not in Beijing and around, some people may use yuan, hardly anyone renmimbi
here you have AI answer based on Reddit thread, which I can confirm is correct:
"In everyday spoken Chinese, kuai (块) is overwhelmingly the most common term used to state prices. Yuan (元) is used in formal writing and official contexts, while renminbi (人民币) names the overall currency system like "Sterling" or "USD" rather than a daily price unit."
Reminbi ~= Pound Sterling
Yuan ~= Pound
Kuai ~= Quid
I deal with Brits on a daily basis.
I seldom hear them use the term "pound". Everyone says quid.
In a professional environment, people usually say pound.
The distinction is context-based, not class- or education-based.
It's my understanding the same is the case for kuai vs yuan as well?
Pity about the USA....
Not that they wouldn't bomb Taiwan if they thought they could get away with it. The reason they can't, of course, is that doing so carries the risk of starting a thermonuclear war with the United States.
> causing chaos to it's [sic] allies...
Well, there's two ways to think about this.
1) China doesn't really have allies. They've a long history of pissing off their neighborhood extending back centuries.
2) They very much are causing chaos to allies, given that the Vietnamese went so far as to buy American military goods to help defend their portion of the South China Sea, which China sees as theirs.
There is zero evidence of this. The last time China even engaged in a direct military conflict was the 1970s. Where as even before Trump America could have invaded almost any country on the planet. and it wouldnt have been to shocking.
Ah, all those exercises are just for fun.
You're either being willfully obtuse, have very little knowledge of the relations between the Republic of China and the People's Republic of China, or are here to troll.
It's absolutely on the CCP's agenda to bring Taiwan under PRC control, by force if necessary. This has been one of their main objectives since the KMT fled to the island when the CCP captured the mainland. [0] The Strait is arguably one of the hottest geopolitical areas on Earth with major implications for pretty much everyone.
As far as "direct military conflict", depends on your definition of that. If the PLA is having one of its units regularly attack American or Western digital infrastructure, I'd very much consider that to be an attack, and there's plenty of evidence of that. There have also been border skirmishes with India.
1. Illegally occupying Tibet and cleansing the region
2. Occupying and cleansing several regions like Uyghur or Hong Kong
3. Wars with neighbors like India and conflicts with all neighbors except North Korea
4. indirectly arming Russia
5. Taiwan
You go against the government (for real) in ANY country you get a bullet, simple as that...
That is everywhere...
In USA, China, Russia, Paraguay, Laos, or wherever you go look...
For instance, you can mock Trump and question the US all day.
You can’t do that in China. Even this website is banned in China.
"It's all the same", just isn't true. If it were, you wouldn't see any conflict.
Basically Yugoslavia's foreign policy during the Cold War, but on a much bigger scale.
In other words, whether they know it or not, every single bank in the world is involved in money laundering.
P.S: I don't know if that's true or not but some people have made the case that there are, percentage-wise, less transactions linked to crime on the public, transparent, ledgers that are the blockchains than in the real banking system.
Soviet-China-Iran - Petro Yuan?
/edit for the pedantic. Russian Federation.
They're modest by raw economic size, but outsized in relevance due to energy resources and geopolitical leverage.
Also I am surprised that China is so close to US (20 Trillion vs 31 Trillion). The gap is less than 2x now.
[1] https://en.wikipedia.org/wiki/List_of_countries_by_GDP_%28no...
You probably haven't turned on the news in a little while.
This current crises has been a boon for alternative energy sources.
Really has driven home the point to even the most 'head-in-sand-right-winger' that Solar is a National Defense issue, not a woke agenda.
At some point china will loose the ability to keep its global currency (Yuan, should be inflating) decoupled from the domestic one (Renminbi is deflating). They have been keeping long running issues in Banking, and Relestate at bay but a global recession (and were on the cusp it seems) is going to be brutal to china.
I suspect that if (when?) that hits this will turn into another Deutsche scandal.
Read the list for yourselves: https://en.wikipedia.org/wiki/Deutsche_Bank#Controversies
The thread devolving into a debate about "reserve currency" is - to be blunt - deeply misinformed. Chinas bond liability and the currency its priced in is the ultimate contra indicator into how its going to handle the coming storm.
just language itself isn't enough
Completely real-time translation is an impossibility since languages have different sentence orders, so it will always be an awkward filter with fits and starts that erodes trust.
True, but trading the USA for China is not a wise move, if only because China would never ever have stepped up in WW2, and will not provide any support in the future either, except --Buddha willing-- by selling arms.
The question is whether this makes folks more or less likely to hold dollars vs yuan as reserve currency
The US is not an authoritarian regime. To call it infinitely worse than China in this regard is false, and is a laughable claim. The President will be out in a few years.