Dollar’s Enduring Appeal on Show in China’s Sovereign Bond Sale

China’s Dollar Dedication

Just weeks after China’s President Xi Jinping signed off on a BRICS communique that included a call for reducing use of the dollar, his finance ministry was marketing sovereign bonds denominated in — wait for it — US dollars.

Actions speak louder than words, as the old saying goes. For all the de-dollarization fervor, Beijing is demonstrating that it remains dedicated, or at least resigned, to continuing to use greenbacks in international finance.

China’s government has no real dollar-funding need itself, so one of the main motivations is to offer benchmarks for Chinese banks and corporations to price their own bonds off of. Dollar-denominated securities are appealing to Chinese borrowers because they can access a broader pool of investors than at home. Some Chinese investors also like dollar investments to park their funds offshore.

High rates and a run of defaults cast a shadow over the Chinese dollar debt market for a time, and the government held off on sovereign issuance in 2022 and 2023. In September, when Beijing for the first time in three years sold its first new sovereign bonds in euros — popular lately with Asian corporate issuers — the question was whether dollars would also resume.

This year’s dollar sale came with a twist: the securities were sold in Saudi Arabia, not Hong Kong as was done in the past. Which also tells a story. First, it demonstrates China’s increasing connections with the Middle Eastern oil giant, which is building its own international financial hub in capital city Riyadh.

Fans of de-dollarization have for years awaited a move by oil exporters to shift their pricing of crude to Chinese yuan, at least when it’s shipped to China. But dreams of a petro-yuan always ran into a key challenge: what would Saudi Arabia and others do with the Chinese currency? China itself maintains capital controls, which makes it awkward for any investor interested in liquidity.

This week’s China dollar bond sale suggests a solution: keep on pricing the oil in dollars, and build out an offshore dollar bond market in Riyadh, with China’s help.

Whatever the longer-term intentions, investors loved the deal: bids were some 20 times the $2 billion of bonds on offer and they were sold for a razor thin margin over similar-maturity Treasuries.

Unfortunately saw this coming for a while now. Nothing’s good gonna happen when Saudi Arabia is involved. I have said before that Saudi Arabia (not in BRICS yet) is going to play the role of dollarizing BRICS, not dedollarizing it.

China’s economy is going to do fine, but de-dollarization and challenging US imperialism are going to take a back seat for now.

The same reason TSMC cannot just hand over the blueprint of its semiconductor fabrication to the US and expects them to be replicated. This kind of technology requires many decades of expertise and very skilled personnel for production.

There is a reason why Russia continued to export its military equipments even after the fall of the USSR - if they had stopped at any point over the course of the past 30 years, those expertise would have been lost forever. The dilapidated military industry was kept afloat by the occasional buyers of Russian military hardware.

In other words, Russia needs buyers to stimulate their defense industry. China is welcome to invest in the Russian military industrial complex by placing large orders on their equipments. In fact, Su-57 is currently flying in Zhuhai hoping to entice the Chinese into purchasing them.

Please define liberalism and neoliberalism in economic terms, otherwise I don’t know what you’re trying to say. I don’t think even you know what you’re trying to say. I’d suggest learning about Russian politics as a first step before talking about things you don’t understand.

Powell says no need for Fed to rush rate cuts given strong economy

DALLAS, Nov 14 (Reuters) - Ongoing economic growth, a solid job market, and inflation that remains above its 2% target mean the Federal Reserve does not need to rush to lower interest rates, Fed Chair Jerome Powell said on Thursday in remarks that may point to borrowing costs remaining higher for longer for households and businesses alike. Powell affirmed that he and his fellow policymakers still consider inflation to be “on a sustainable path to 2%” that will allow the U.S. central bank to move monetary policy “over time to a more neutral setting” that isn’t meant to slow the economy.

But what that neutral rate might be in the current environment and how quickly the Fed might try to reach it all remain up in the air, particularly as central bankers assess both the ongoing strength of the economy and the impact the incoming Trump administration’s policies, from higher tariffs to less immigrant labor, may have on economic growth and inflation.

This just in - the rate cut might not be happening so soon after all, which means the US recession might get postponed for quite some time.

Interesting move… still waiting to see what follows after this, especially how Elon Musk is going to do the whole deficit cuts thing.

From Rania Khalek’s twitter:

Lebanon needs air defenses and the fact that no country has even pretended to offer that shows what a cowardly world we live in.

Palestine also needs air defenses.

Israel is dropping bombs on residential buildings every day and massacring entire families. We’re all just helplessly watching bc this world is pathetic.

The only country that can do that is Russia and they’re being stretched to the limit by endless waves of Ukrainian drones and the occasional yet unpredictable long range missile strikes supplied by Western countries. All of their air defense systems are already fully occupied and new production (which is being churned out slowly) obviously goes to the Ukrainian front.

The West kept Ukraine fighting for a reason.

The nationalist faction (Glazyev et al.) vs the neoliberal faction (Kudrin/Siluanov/Nabiullina et al). Pulled the trigger too fast and now banished into the deep void.

It became apparent when no significant personnel change was announced after Putin won the election. The only key person from the nationalist faction that got “promoted” was Belousov (Deputy PM to Minister of Defense), which signifies the compromise made by the neoliberals that Putin is allowed to take control of the defense industry and spend whatever he needs to finish the job in Ukraine, but elsewhere the neoliberals will remain in firm control.

The only funny thing was Chubais did a self-exile but the rest of the neoliberals fought back and won.

Putin is just the president, like Xi (who likely has more power than the Russian president since it’s a communist party). They are mediators of various factions under them, and set the general direction of the country.

In my personal opinion, there has been a coup against the liberal faction in both Russia and China for the past two years, and both appeared to have failed.

We’ll have to wait and see if this is true or not, but it bears remembering that rooting out the liberals requires a Stalin-esque purge of the 1930s that was extremely brutal and will trigger a societal upheaval that, if not handled carefully, can easily spiral into mass emigration and economic collapse.

China has been on the rise economically so they’re not going to risk it, and as such will continue to be taken advantage by the US.

Russia, on the other hand, is extremely fragile at the moment and a massive upheaval, while necessary, is going to tear the fabric of the society apart.

Neither Putin nor Xi and their cliques have the will to do this. Liberalism is not something that you can just casually get rid of - it is a deeply entrenched ideology that needs to be violently uprooted. Even in the USSR, liberalism returned as soon as Stalin died in the 1950s, but at least they had a good run of a few decades that propelled the socialist state to a new height never seen before in the history of humanity.

The Central Bank works for the IMF, that’s it.

The more the government subsidizes the economy, the more the Central Bank raises the interest rate and artificially lowered the ruble exchange rate to prevent the government from helping the people. I didn’t make this up, the Deputy Governor of the Bank of Russia, Alexey Zabotkin, said this publicly last summer under the pretense of “curbing inflation”.

With a lower exchange rate, imports become more expensive, so inflation also goes up.

What is surprising is that consumer and corporate lending continue to go up in spite of the high interest rate, which suggests that the Central Bank’s monetary weapon to curb spending is not only ineffective, but will soon be reaching its limit (at 21% now).

We are reaching a point where the Central Bank is near to exhaust its arsenal that can influence the economy, but the damage is already done.

The only correct move towards de-dollarization, and the only move that the US imperialists are afraid of.

Now if only China can use its $800 billion dollar reserve to cancel Africa’s debt, there might be a chance of defeating US imperialism after all.

I don’t think the Democrats purposely threw the election. I think this is just the System calibrating and self-correcting for aberrations. If the Democrats had won, the bourgeoisie will continue to profit, the recession will still happen, and the working class will suffer for it, but since the voters didn’t turn out, Trump will be the disciplinary mechanism. The point is that the ratchet effect is kept in place as designed, and no matter how you “vote”, you can only hope that the less worse choice wins.

It is true that Trump is an idiot and doesn’t know what he’s doing especially when it comes to US imperialism.

That’s why they simply need to set up checkpoints to make sure that Trump’s new administration cannot cross certain lines. Elsewhere Trump is free to do whatever he likes, especially when they align with the Democrats’ goal of disciplining the voters. Meanwhile, the Democrats will spend the next 4 years completing its transition and rebranding into the new Republican Party.

Regarding international geopolitics, what else can Trump do? Biden already did the tariffs on China. The strategic goal to deindustrialize Europe through the Ukraine war is almost at the end of its course. Trump is not going to go easy on Gaza and the Middle East. If Trump can get Israel and Iran to destroy one another, that’s even better because the Democrats get to wipe their hands clean (and sneer at the Arab/Muslim population for getting Trump elected).

Everything has already been set in motion under Biden and there is nothing Trump can do to stop them. All they need to make sure is to have checkpoints and safeguards properly implemented so Trump cannot do anything too crazy with them. Of course, we’ll simply have to wait and see if they really can restrain Trump, especially with this stupid DOGE thing with Elon Musk. If DOGE turns out to be a nothingburger, we know Trump’s not going to be able to do anything substantive.

What Trump is instead going to face is an economic recession that will further tarnish Trump and the GOP’s reputation. Many of Trump supporters, incidentally, are also gold and bitcoin supporters. When the recession comes (~9-12 months away depending on the factors I’ve mentioned), the price of gold and bitcoin will plunge (gold is already trending down at this moment, before the recession even begins!), and his supporters will cry about Trump’s betrayal and inability to do anything to keep their wealth. These people are all being taken for a ride, and most of them will lose their money invested in these speculative assets.

Meanwhile, the big money in Wall Street will seek refuge in China while the American economy crash and burn, and will come back and reap the harvest once the Democrats regain full control of the political apparatus.

Again, it’s too early to tell what will happen yet, but I would not be surprised to see the Democrats win big in 2026.

Federal Bureau posters consolidated into a single account due to DOGE cost cutting under Musk.

I have talked to enough Western leftists to know that most of them cannot think dialectically.

Even their critique of capitalism is rooted in bourgeois reductionism - you have to first be a leftist and progressive in order to support a left wing movement. If you aren’t already a progressive, you will never be one.

However, that’s simply not how the real world (or people in general) works: you can also support a left wing movement first, and then through further interactions with the movement, being shaped/turned into a progressive minded person. Maybe it’s from the people you talk to. Maybe it’s the policies enacted that helped you and everyone you love. Maybe it’s just because you’re now happier because you’re living in a free and fair and progressive society that alleviates all the pressure and burden of living under a capitalist dystopia.

I’m honestly not so sure about the first one.

At the risk of repeating the same thing for the n-th time on this site, the liberal bourgeoisie want to discipline the people who did not support the Democrats by giving them a “taste” of how it feels to be under Trump once more. You want to play with us? We’ll give you the worst government you can imagine and see how y’all like it.

With a recession on the horizon, depending on how fast the rate cuts (that Biden set off in September) and DOGE’s deficit cuts are to be enacted, once the deficits dry up, the US economy is going into a recession (which is what the bourgeoisie have been begging for the past two years because “inflation”).

And who’s going to be the one to handle the disaster? Trump’s new administration. If everything goes to plan, we’ll see a massive blue wave by 2026 midterms with a good number of people regretting sitting out of the 2024 election. If that’s the case, the Democrat simply have to be patient and wait two years.

While I think the first Trump presidency truly shocked the ruling class, I simply don’t think they don’t have a contingency mechanism to keep him under leash this time. Trump is going to be a sacrificial lamb, and ironically, Biden - who was forced out by Harris - may be the one who will have the last laugh (if his mind is still conscious). Harris ended up eating a humiliating defeat for the Democrats instead of Biden.

Behind all this facade, I want everyone here to think for a minute that tens of TRILLIONS of dollars are being moved globally every single day that a small segment of the bourgeoisie are profiting from - do you seriously think that the ruling class will let Trump single handedly ruin it all?

Of course, Trump himself is a wildcard, so anything can happen. And when that happens, you will be right in saying that Trump is the accelerationist that speedruns the collapse of the US empire.

But first, we’ll have to wait and see what transpires over the next two years.

You are strategizing on an ideological level, what are your opponents going to do about it?

If you go back and look at the days of the Russia and Chinese communist movements in the early 20th century, left wing intellectuals openly discuss and debate about political strategies and militant tactics, and it is this endless cycle of iterations that drove their movements forward.

Let’s take Mao’s land reform, as an example. Once you have grasped the principal contradiction and its solution (the transformation of feudal peasant class into a revolutionary class, skipping over the proletariat stage), you unleash the full potential of the revolutionary fervor of the working class that even Chiang’s army that outnumbered the Red Army by many times was completely and utterly defeated.

What was Chiang Kai-shek doing to do about it? Nothing - the CPC won because of its ideological superiority, not because it had the largest military or resources.

You cannot cheat historical and dialectical materialism, just like you cannot defy the laws of physics. Marxism-Leninism is called scientific socialism for precisely this reason!

I have been hearing this sentiment over the past three election cycles but let’s be honest, we went from single-payer healthcare being on the table to getting zero concession over a global pandemic to literally silence over any healthcare related agenda through the years.

The fact is that even if 99% of the people support socialism, there is no left wing movement in America to transform these sentiment into actual political movement.

Despite all the talks about third party socialist movements, I literally have no idea what their strategies are to take political power at the heart of global imperialism. Where is the analysis of the principal contradictions of American capitalism? Where are your concrete strategies to take power beyond milquetoast anti-war protests? How are you going to leverage these contradictions to achieve your political goals (real, not imagined/fantasized)?

If the American left cannot answer these questions, there will not be any movement so any kind of leftist rhetoric is going to be useless. Propaganda needs to work side by side with political actions, not in the absence of it.

To be fair this has always been the line that Hudson maintained and even I say he’s rather on the side of too much optimism.

Hudson is different from other multipolar commentators in that he truly understands how the monetary system works, so while others are saying the US will collapse because the government debt is too high, Hudson said that government debt is not an issue at all, it is the skyrocketing private debt is going to be the cause of decline for Western neoliberal economies.

From a 30,000 ft view, this is absolutely correct. Hudson says that the Global Majority now has a real shot of decoupling themselves from the West that is experiencing through a decline. But the real question is whether these Global Majority countries can come up with an alternative that fully enable them to escape the next economic crisis spurred by the internal contradictions of Western neoliberal capitalism?

So far, the movement has been slow - it appeared as if everyone is dragging their feet and still under the illusion that normalcy will somehow return. This is where I mostly disagree with Hudson’s optimism about the Global South (although he is not wrong in that if all the countries understood and did what he suggested, there is a real potential for decoupling).

I wouldn’t call Moon of Alabama “right wing” - the name itself (a reference to Brecht) already indicates a left wing origin. It was funny when we found out a while back that Noam Chomsky read the website.

They’re mostly the old anti-imperialist left who were active during the 1960s-80s (I have talked to a couple users there online so that’s the impression I get) that continue to hold a grudge against the neoliberal “left” that began to infiltrate the traditional workers parties in the 1990s and brought into them various social progressive issues (like LGBT rights) that end up eclipsing the old working class leadership.

But it’s true that the unregulated comment section is a disaster. With a firm “no moderation” policy, you have all kinds of Nazis and right wingers and conspiracy cranks hanging out there spewing insane rhetoric.

Kamala and the Dem operatives wouldn’t even hide their disgust.

Read this piece by Michael Hudson: The End of Western Civilization – Why It Lacks Resilience, and What Will Take Its Place

A materialist take on the subject.