摘要：For too many years China has not been taken seriously on the global economic stage That may change later this

For too many years China has not been taken seriously on the global economic stage.  That may change later this year when it’s likely that the global economic order will be shaken up.   For the first time, China’s currency, the yuan, could be endorsed by the International Monetary Fund (IMF) alongside the U.S. dollar,  the euro and other major currencies as a global reserve currency.
Assuming that this actually happens, it’s something that is long overdue.  A little over thirty years ago, in 1978, Deng Xiaoping initiated economic reforms that were described at the time as “socialism with Chinese characteristics,” which initiated what has been known as China’s economic miracle.
With a population of 1.36 billion, and a recent historical economic growth rate that exceeded that of all major countries,  it was inevitable that China would win the title of the world’s largest economy. It wasn’t a question of if, but when.  It happened last year when the United States lost the title of the world’s largest economy to China. It was a title that the U.S. held since 1872, for 140 years, when it unseated the United KIngdom as the world’s largest economy.
The Chinese economy is now valued at $17.6 trillion, slightly greater than the $17.4 trillion the IMF has estimated for the United States. By the end of this decade the IMF has projected that China’s economy will be valued at almost $27 billion, 20 percent larger than that of the US, which the IMF is projecting at slightly over $22 billion.
While news of China becoming the world’s largest economy was reported by the Western media, it was only in the headlines for a few days. Few western commentators delved into the implications to analyze what this meant for the future of the United States, China and the global economy.
It’s clear what this means to China and the country’s future.  Many have described this century as China’s century, and becoming the world’s largest economy is key to that becoming a reality. 
But Ignored by the western press was the potential impact on the United States.  Today, slightly over 60 percent of all global reserves are held in U.S. dollars.  Many have suggested that this by itself sets the stage for what has been characterized as a “free ride” for the United States.  It has allowed the U.S. Federal Reserve to keep interest rates at near zero, seemingly indefinitely. It has also enabled the Federal Reserve’s printing presses to increase America’s money supply by over $4.5 trillion. 
The dollar’s status as the primary global reserve currency has forced foreign governments to hold their reserves in dollars, regardless of whether they wanted to.  It also resulted in U.S. public debt skyrocketing to $17.8 trillion at the end of September. Of this debt, $6.1 trillion or approximately 47 percent was held by foreigners, the largest of which were China which held $1.3 trillion and Japan which held $1.2 trillion.
The role of the U.S. dollar also enabled America’s budget to skyrocket, to a projected $469 billion this year, and as projected by the U.S. Congressional Budget Office to $1 trillion starting in 2022.
Twice-a-decade the IMF conducts a review of the basket of currencies its members can count toward their official reserves. The next review is scheduled for later this year. With China’s economy now the world’s largest, the IMF will discuss whether the yuan should be a global reserve currency alongside currencies including the U.S. dollar, the Japanese yen, the Swiss Franc and the United Kingdom’s pound.  If the IMF allows the recognition of the yuan as a reserve currency, it will accelerate the decline of the U.S. dollar’s dominance in global trade and finance. 
To obtain approval from the IMF, China will need to satisfy the IMF”s economic benchmarks and obtain the support of most of the organization’s 187 member countries.
Approval will be partly based on whether the IMF decides that the yuan is “freely usable.” China’s currency may now be able to pass this test, partly due to meeting the other IMF requirement of being a large exporter. 
Due to cross-border yuan denominated trade, the proportion of China’s trade that is currently settled in the yuan has risen to about 20 percent, the market for yuan-denominated Dim Sum bonds has grown to almost $73 billion from zero in a little over seven years, and Beijing has also increased foreign access to the country’s financial markets, with agreements to allow the yuan to trade freely in Frankfurt, Hong Kong, Singapore and London.
The U.S. could potentially torpedo the yuan’s becoming a global reserve currency because the change requires somewhere between 70 percent or 85 percent of the vote under the IMF’s bylaws, and the U.S. has 17 percent of the votes.  But politically this would put the U.S at odds with most other countries, including China and other emerging market economies. So, a U.S. veto is unlikely, and I believe that the yuan will obtain approval. 
The benefits for China of the yuan becoming a reserve currency are significant. If the yuan is designated a reserve currency it would allow central banks, especially those in developing economies to hold yuan denominated assets, and diversify not only away from the dollar, but the euro, Swiss franc and yen as well. 
In fact, the yuan will likely be more widely used in both financial markets and in currency trades than Japan’s yen or the United Kingdom’s pound. 
When, not if China’s yuan achieves global reserve currency status, China’s century will have truly begun.   No other economic event will have as much potential impact on the global economic system.
Author: Jeffrey Friedland

Jeffrey Friedland is CEO of the financial services firm Friedland Global Capital, which provides corporate finance and strategic advisory services to entrepreneurial companies in emerging and frontier markets.
He first traveled to China in 1988, opened an office in China in 2003 and continues to make frequent visits to the Asia-Pacific region, including China. He is an author, speaker and thought leader on emerging and frontier markets, and the global economy.
Mr.Friedland has been the chief executive officer and a director of a NASDAQ listed financial services company and a director of a New York Stock Exchange listed company with all of its business operations in China.
He has been featured or quoted in numerous publications including the Wall Street Journal, USA Today, the South China Morning Post and Forbes, and is a regular contributor to the magazine, Money China.
Mr. Friedland has been a frequent speaker at conferences and events throughout North America, Europe and Asia, including speeches to individual and institutional investors on emerging and frontier markets.