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Chinese President Xi Jinping and leaders of other countries line up for a photo at a ceremony to mark the decision to set up the Asian Infrastructure Investment Bank, Beijing, China, Oct. 24, 2014 (Pool photo by Kyodo News via AP Images).

New Order: China’s Challenge to the Global Financial System

Tuesday, April 14, 2015

The golden age of American economic primacy has ended. Two years ago, China surpassed the United States as the world’s top trading nation, and late last year it also surpassed the U.S. to become the world’s largest economy in purchasing-power terms. China is an economic titan, but until recently, its impressive rise had not been accompanied by a vision to reshape the global economic order. However, this is beginning to change.

Rather than accepting the status quo as given, Beijing is slowly working to revise foundational elements of the U.S.-led economic order. First, it has called into question the desirability of a global economy dependent on the U.S. dollar as its key currency. Instead, China has actively promoted the use of its own currency, the yuan, for international trade and investment purposes. While progress has been incremental, it has also been steady and shows no signs of abating. ...

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