With the Chinese yuan approved by the International Monetary Fund (IMF), one of the 2015 predictions by George Soros might be remembered. Earlier in the year, Soros had warned that the only way to avoid a future World War 3 involving the United States and China was to allow the Chinese yuan to have a chance at being the world’s reserve currency. Unfortunately, even though the Renminbi, which is the Chinese currency’s official name, has been approved, there are other issues at stake.
In a related report by the Inquisitr, leaders in China warned that World War 3 was “inevitable” if the United States did not “stop meddling” in the activities of the emerging world superpower. One of the major issues is China’s claim on 1.2 million square miles of the South China sea, and the warning issued in an editorial by China’s ruling Communist Party was fairly blunt.
“We do not want a military conflict with the United States, but if it were to come, we have to accept it,” they said. “China should carefully prepare for the possibility of war with Washington and that if the United States’ bottom line is that China is to halt activities, then a U.S-China war is inevitable in the South China Sea.”
Several months later, Admiral Wu Shengli of the Chinese Navy claimed it was dangerous for the U.S. Navy to send any warships near the disputed territories.
“If the United States continues with these kinds of dangerous, provocative acts, there could well be a seriously pressing situation between frontline forces from both sides on the sea and in the air, or even a minor incident that sparks war,” the Chinese admiral warned. “[I] hope the U.S. side cherishes the good situation between the Chinese and U.S. navies that has not come easily and avoids these kinds of incidents from happening again.”
In actual battlefields, the world’s superpowers have taken opposing sides, causing writers for CNN to ask if a new type of World War has already started.
“This is what a world war looks like: strange bedfellows, conflicting agendas, alliances of convenience. And if you think the core of the fighting, the issues and ideologies at stake, seem muddled, try to find out what World War I was all about. Clarity is not a requirement for a world war.”
Some experts believe a war is already being waged on an economic front. For example, Russia and China signed a 30-year agreement worth $400 billion to supply natural gas without using the U.S. dollar. With the Chinese Yuan approved by the IMF, this economic pressure may only heighten, but George Soros believes this action was necessary in order to avoid World War 3.
Earlier in 2015, Soros advocated that the United States made a “major concession” by allowing the Chinese yuan to become a rival to the U.S. dollar in return for China’s leadership attempting to reform its economy. Soros believes that having the Chinese yuan approved would create a “bind connection” between the two economic systems. Otherwise, if the Chinese economy ever faltered and there was dramatic internal turmoil, Soros believed there was a “likelihood” that China’s Communist Party would start an external conflict in order to unify the people against a common enemy.
“If there is conflict between China and a military ally of the United States, like Japan, then it is not an exaggeration to say that we are on the threshold of a third world war,” Soros said. “[Without approving the Chinese yuan,] “there is a real danger that China will align itself with Russia politically and militarily, and then the threat of third world war becomes real, so it is worth trying.”
Chinese Renminbi Approved And Explained
According to Bloomberg Business, the International Monetary Fund believes the Chinese yuan is ready.
“The renminbi’s inclusion in the [Special Drawing Rights basket] is a clear indication of the reforms that have been implemented and will continue to be implemented and is a clear, stronger representation of the global economy,” said IMF Managing Director Christine Lagarde.
Renminbi means “the people’s currency” in Mandarin, but the yuan is the unit. The Special Drawing Rights basket, or SDR, serves as a “supplementary reserve asset to augment countries’ gold and dollar holdings. While the SDR isn’t technically a currency, it gives IMF member countries who hold it the right to obtain any of the currencies in the basket to meet balance-of-payments needs.”
The Chinese yuan is also being favored in its weighting, which affects the interest rate that world governments pay when borrowing from the IMF.
“The addition will take effect Oct. 1, 2016, with the yuan having a 10.92 percent weighting in the basket, the IMF said. Weightings will be 41.73 percent for the dollar, 30.93 percent for the euro, 8.33 percent for the yen and 8.09 percent for the British pound,” explained the report.
The U.S. Treasury department also supported the IMF’s decision, although some, such Pennsylvania Democrat Bob Casey, believe that having the Chinese yuan approved only “validates China’s history of cheating on its currency.”
[Image via Uncyclomedia Commons]