Brent Johnson debates Louis-Vincent Gave on de-dollarization.
This debate focuses on the highly topical issue of de-dollarization and features two of the most prominent voices in global finance today: Brent Johnson and Louis-Vincent Gave.
Brent Johnson has been vocal about his belief in the enduring strength of the US dollar. He argues that the US dollar will not only remain the world’s reserve currency but will also spike in a “violent” global debt crisis. His Dollar Milkshake Theory posits that the US dollar will continue to draw strength from the global financial system, challenging the notion of de-dollarization.
On the other side, Louis-Vincent Gave, a renowned economist and financial strategist, offers a contrasting view. He opines that dedollarization is not a mere possibility but a reality that the world is gradually moving towards. According to Louis, the global economic landscape is shifting, with nations increasingly exploring alternatives to the US dollar for international trade, potentially leading to a gradual decline in the US dollar’s dominance.
This discussion is a riveting exploration of the future of global currencies, featuring insights from two of the most respected minds in the field, an intellectual clash that will enhance your understanding of global finance and the role of the US dollar in the world economy.
Louis-Vincent Gave ist he CEO of Gavekal, a Hong Kong based company he cofounded over twenty years ago with his father Charles and Anatole Kaletsky. Gavekal has grown to become one of the world’s leading independent research providers to institutional investors around the globe. Louis has written seven books, the latest being Avoiding the Punch: Investing in Uncertain Times with reviews how to build a portfolio at a time of rising geostrategic strife, and when very low interest rates and stretched valuations on most assets announce constrained returns on most assets over the next decade.
Brent Johnson brings twenty five years of experience in the financial markets to his position as CEO of Santiago Capital. He has a long career in finance, having also been Managing Director at BakerAvenue, a USD 2bn Asset Manager and Wealth Management firm. Before joining BakerAvenue, Brent spent nine years at Credit Suisse in their private client group. Brent regularly gives interviews and speaks at conferences regarding precious metals, currencies & macroeconomic trends. His views have been quoted in numerous print, online and television outlets. He lives in San Juan, Puerto Rico with his wife Mary and son Moses.
This debate was recorded on the April 30, 2024. We are publishing the highlights of this debate below.
Ronnie Stöferle
Gentlemen, we will now dive into a discussion on topics ranging from dedollarization, global macro trends, the status of the Japanese yen, and the developments in the world of gold. These topics are like a complex 3D puzzle that we aim to piece together. Louis is particularly renowned for his analogies; he once compared the US dollar system to Microsoft Windows, noting how, despite its flaws and occasional malfunctions, it remains the dominant operating system, much like how the US dollar continues to lead among global currencies. This leads us to the overarching question of whether the US dollar will retain its dominance, or will it be supplanted within the next decade. Louis, could you share your perspective on this?
Louis Gave
Will the US dollar still be the dominant currency over the next 10 years? Yes, as I’ve said in my books, the US dollar is the Microsoft of the world. To replace it, you need not only a better system but a much better one that everyone changes to at once. Having said that, the story of the past 20 or 30 years, while Microsoft was still dominating and doing a great job, you actually did better with Apple, right? If you bought Microsoft in 2000, it was a 500bn market cap, and it’s now over two trillion. But Apple was a 50bn market cap and is also over two trillion today. In the past 20 years, Apple created a new operating system. They invented the smartphone, and from there, a lot of people moved to Apple’s new operating system, and sometimes running both side by side.
This is, in my view, what China is trying to do. China has said the growth in the world over the next 20 years will be in trade in emerging markets. There’s no reason trade between Mexico and China or South Africa and Zambia needs to be priced in US dollars. Thus, they are attempting to create a new operating system. And lo and behold, this is happening. We now live in a world where 20% of oil is no longer priced in US dollars. Just like it would have seemed absurd for Apple’s operating system to be on 30% of screens around the world. Twenty years ago, this would have seemed like madness.
So you can chip away at it through specialized trade. The only growth in trade in the world now is emerging markets to emerging markets, for a number of reasons, whether it be geopolitical, such as the Russian sanctions, or financial, such as China offering great financing terms to Africa and Southeast Asia. It is a changing world, and I think the Apple analogy to Microsoft works decently well.
Brent Johnson
Yeah, I actually like that analogy. The world is clearly going through a divorce. When you go through a divorce, some things have to change, like buying a new house or changing insurance. I don’t think the monetary system will look the same in 10 years, but I agree that the dollar will still be dominant.
A lot of people look at this divorce and automatically think they’ll go with Apple because it’s the cool new thing. But remember, Steve Jobs wasn’t the nicest guy and got fired. Apple went through tough times. So when discussing de-dollarization, people think it’s a foregone conclusion and it will happen quickly and peacefully.
But I believe any transition that puts another system on par with the dollar or replaces it will cause incredible economic volatility and possibly military violence. In that process, the dollar could go higher. I don’t think Microsoft and Apple will develop and operate peacefully alongside each other in this scenario. Just because Apple is the cool thing in the real world doesn’t mean Apple will be the cool thing in this scenario.
Niko Jilch[1]
Louis, could you perhaps summarize your viewpoint on China’s strategic plans, especially in terms of its monetary policies? You’ve articulated some compelling comparisons, including how Beijing manages its central bank akin to Germany’s Bundesbank approach, which intrigues us Austrians and Germans. Could you expand on this and China’s broader economic ambitions?
Louis Gave
I agree that any transition is unlikely to happen without military violence, as we’ve seen in Libya and Iraq. Americans believe their greatest comparative advantage is the rule of law, world class universities, entrepreneurs, natural resources, and the inability to be invaded. However, foreigners believe the US’s greatest comparative advantage is the US dollar, which allows for funding budget and current account deficits without constraints, as seen after the 2008 mortgage crisis.
Chinese policymakers recognize the US dollar’s importance and question why they should fund US growth using the dollar. When Xi Jinping became president, his focus shifted from domestic issues to an „imperialist vision“ of China’s future. This vision includes initiatives like One Belt, One Road, the Silk Road Fund, and the Asia Infrastructure Investment Bank. It’s not about invading neighboring countries but rather a „road-building exercise“ to facilitate trade and the flow of commodities and finished goods.
Given this vision, China aims to de-dollarize emerging market trade to avoid paying tribute to its geopolitical rival, the US. To achieve this, the renminbi must be a strong currency, and the renminbi bond market must be a reliable store of value. Currencies serve as a means of exchange, a unit of account, and a store of value, with bonds and equities as options for the latter. Emerging market central banks must be convinced that renminbi bonds will hold their value and keep reserves in renminbi. Over the past 10 years, China has followed a policy similar to Germany’s in the 1970s, prioritizing the bond market over its stock market and maintaining a steady currency.
Brent Johnson
I completely agree with Louis’ characterization of what China is trying to do. I have no issue with his explanation. However, my concern arises when people assume that just because China is trying to achieve something, they will be successful.
I believe it will be much harder to accomplish in reality than to write about in a book. For instance, part of the reason China’s bond market has remained relatively flat is due to their quasi-pegged currency and interest rates, which have been kept low because they had largely shut down their economy until recently.
There is no significant external holding of RMB bonds; it’s mostly internal. Despite this, the Chinese yuan has lost 15% of its value in the last two years. So, when people say the rest of the world will stop holding US bonds because the dollar is losing value and start using the yuan instead, it’s worth noting that even though the US dollar is supposedly losing value, the yuan has lost 15% against it. The other reason Chinese bonds have outperformed US bonds is because the US purposefully increased rates, which causes bond prices to fall. Now, I’m no fan of central bankers, but they definitely understand that raising rates leads to falling bond prices. This idea that the US is shocked by the performance of treasuries is, in my opinion, off base. Of course, they knew raising rates would lead to lower bond prices.
I will argue until the day I die that the US has purposefully weaponized the dollar over the last couple of years. Higher interest rates and a blowing out of the budget are often used as evidence that the dollar can’t last forever. However, considering the current state of the world, higher rates in the US affect the rest of the world more than the US itself because the world uses dollars. Although they’re starting to use Apple as well, they still use Microsoft, and they owe a lot of money to Microsoft. In other words, the world owes over 30 trillion in US dollar-denominated debt and another 80 trillion in off-balance sheet derivatives in US dollars.
So, I don’t see how we can transition from using Microsoft to Apple. If everyone starts using Apple, where will they get the money to finance, service, and pay off all the US dollar debt? In other words, the process of de-dollarization, if it takes place, pushes the US dollar higher, not lower. If there’s less circulating, there’s less supply, but all that historic US dollar debt still exists. I can’t figure out how we can transition from one system to another or even have dual systems without reconciling all that outstanding US dollar debt. Until that is reconciled, we have the US dollar to contend with.
Ronnie Stöferle
Let’s pivot our discussion to gold, which may emerge as a vital diversifier in today’s climate. You mentioned that Xi Jinping doesn’t care about the Shanghai Composite or Chinese equities. Do you think he cares about the price of gold?
Louis Gave
To answer your question directly, I don’t think Xi Jinping cares about the gold price. I think gold for him is a means to an end, as he’s looking to reduce China’s dependency on the US dollar and de-dollarize emerging market trade. Regarding China buying gold, it’s important to note that gold demand is primarily driven by emerging markets.
Gold is a play on emerging markets, where physical demand is concentrated in countries like China, which accounts for about a third of global gold demand, and India with another third. People in emerging markets are the ones who predominantly buy physical gold. When emerging markets do well, gold does well, and when they do badly, gold also suffers. Although gold is often seen as inversely correlated with the US dollar, the past 18 months have shown that gold demand can remain strong even when the dollar is strong, as emerging markets continue to perform well. When the dollar’s weak, emerging markets tend to do even better, but you don’t need the dollar to be weak anymore for emerging markets to do well, which is a very important change we’re going through.
So that’s the first function of gold. The second function, typically focused on by Westerners, is that gold is a hedge option for the world falling apart due to wars, geopolitical reasons, financial crises, or other bad scenarios. We’ve had a glimpse of this, and while China has been buying a lot of gold, the big new marginal buyer has been Japan. In March, after the BOJ announced it would sit on the yield curve forever, the yen moved from 146 to 155 very quickly. Japanese investors started buying gold like crazy, as evidenced by the increased volume in the main gold ETF in Japan, 1540JT, trading at a 10% premium to NAV.
This suggests that Japan cashed in on the second option, the hedge against financial repression or geopolitical crisis. This raises an interesting question because Japan’s situation, with a collapsing yen and high debt, could potentially happen elsewhere. It’s not a stretch to think it could happen in Europe, where France is running a 5.5% of GDP budget deficit at a time of full employment and economic recovery. The same could be said for the US, with full employment and budget deficits of 6% of GDP.
While the stock of debt may not be as high in Europe and the US, these massive budget deficits will get them there over time. Additionally, the ownership structure of the debt is very different, with a third of US debt owned by foreigners, only 4% of Japanese debt is owned by foreigners, while more than 40% of French debt is owned by foreigners. This means that in these countries, things can move much quicker.
Does the Chinese government care about the gold price? No, they don’t. For them, gold is a means to an end. It’s a way to give credibility to their currency and to de-dollarize their trade. They can tell other countries that they will trade in renminbi, and if they don’t want to keep the renminbi, they can trade it for gold at the Shanghai gold market. This is particularly attractive for countries like Russia, Kazakhstan, and those in the Middle East.
Brent Johnson
The recent surge in gold demand in Asia, particularly in Japan, is not solely driven by concerns about the US dollar. In fact, when people in Asia buy gold, it’s often because their own currencies, like the yuan or the yen, are losing value. While the dollar may be a secondary concern, the primary motivation for individuals buying gold is to protect their daily living expenses from currency devaluation.
Gold is undoubtedly a crucial component of any investment portfolio, as it has historically served as a hedge against economic and political uncertainties. However, it is not a “silver bullet”, pardon the pun, that can solve all economic problems. Gold’s value and demand are influenced by various factors, including local currency strength and central banks’ desire to diversify their reserves. Therefore, while gold is an essential part of a diversified portfolio, it should not be viewed as an all-encompassing solution to the complex challenges of international politics and finance.
Gold isn’t the most convenient asset to move around the world. It can be done, but is China really going to import all this gold just to start shipping it abroad to settle its trade balance? Gold has been used for centuries, and it can still be used, but it’s not as efficient, easy, or quick as the current system. Until a new system incorporating gold is in place, using gold will remain less efficient. Some countries might still use it to de-dollarize, despite the inefficiency. However, it’s worth noting that attempts to use gold by smaller countries in recent years have often failed. While gold is an important asset and everyone should own some, it’s not a silver bullet that solves all economic problems.
Louis Gave
The initial Bretton Woods days saw countries like France, the UK, and Germany storing their gold in New York, facilitating trade settlements by simply moving gold bars between designated boxes. However, the loss of faith in global institutions and the US, particularly after the Russian sanctions, has led to a shift in gold usage. China won’t store its gold in New York; they want to create their own set of gold boxes in Shanghai, but that would imply that all the other nations place their trust in China.
China’s Belt and Road initiative, which involves building infrastructure in other countries and establishing long-term financial dependencies, could potentially create a new dynamic where gold is used for trade settlements. By building highspeed rail lines and nuclear power plants in countries like Indonesia, China is creating a level of dependency similar to the US post-World War II.
Countries like Russia and Kazakhstan, which are more dependent on China, may have less choice in trusting China to hold their gold. However, the extent to which other countries will follow suit remains an open question. The reality is that the shift towards using gold in trade settlements is slowly building up, with more and more trade being settled in this manner.
Niko Jilch
Within this framework, who does one trust? The CCP, the state, or Xi Jinping himself?
Louis Gave
In China, the party and the state are intertwined, with the party constitutionally positioned above the state. Trusting China, therefore, means trusting the Chinese Communist Party. While one might speculate about political evolution, the party’s ideology currently views such changes as an impossibility.
Ronnie Stöferle
Talking about divorce and its complexities, in this ménage à trois, Europe is often overlooked amidst the dominant narratives of the US and China. Are we seeing “de-euroization”?
Brent Johnson
In my opinion, yes. And for a couple of very specific reasons. This world is going through a divorce, as I mentioned earlier. It seems to be a mutually desired divorce, with both the US and China seeking to decouple from each other to a significant extent, while acknowledging that some level of business interaction will persist. This shift is not solely driven by the East or the West. Rather, it reflects a broader geopolitical trend where alliances are shifting, and cooperation between major powers is becoming less certain.
China is taking steps to insulate itself from the West, though not entirely severing ties. Previously, China relied heavily on imports from Europe. Contrary to some expectations, Europe’s alignment has not leaned towards Russia or China against the US. China’s distancing from the West is hurting Europe adversely. Concurrently, the US appears to be prioritizing its interests over its traditional alliance with Europe. This strategic realignment is observable in the significant outflow of industry from Germany, some relocating to China and others to the United States. At a recent entrepreneurial conference in Germany, attendees noted a trend of talented individuals migrating to other European countries such as Liechtenstein and Switzerland, as well as destinations outside Europe like Dubai. This shift underscores Europe’s position as the disadvantaged party in this geopolitical recalibration, a situation unlikely to change soon.
Ronnie Stöferle
Europe is like the child who is left disadvantaged after the divorce. A friend of mine in the automotive sector emphasized the increasing presence of Chinese cars in our markets in the coming years. This trend poses a significant challenge to German automakers such as BMW, Mercedes, and Porsche, which have historically taken pride in their industry. I agree that Europe is emerging as the primary casualty of this geopolitical transformation.
Louis Gave
As a European who left Europe, the type Brent described, allow me to interject. Europe had a significant opportunity to act as a mediator in this geopolitical separation. However, due to policy failure, it failed to do so. There is a quote from Tolkien’s “The Lord of the Rings” that resonates with me: „One ring will always corrupt, two will divide, but with three, there is balance.“ This notion, applied metaphorically, speaks to the potential for a balanced global order with the US, Europe, and China each wielding influence.
However, Europe faltered in fulfilling this role. Consequently, we find ourselves in a “two ring” world, as Brent suggested. Notably, China had become an industrial powerhouse and transformed global trade dynamics. Its emergence as a major exporter of automobiles, heavy machinery, and agricultural equipment has reshaped the competitive landscape. The remarkable productivity gains in Chinese industries have propelled its status as a leader in global manufacturing. This shift has created a self-reinforcing industrial ecosystem, providing China with a substantial competitive advantage that will be difficult for other nations to match. This makes it very hard for other countries to compete or to catch up.
Brent Johnson
Louis’s perspective on the global economic situation has made me realize that it’s essential to acknowledge that all major economies, including the US, China, Europe, Japan, and others, will face difficulties and “take a hit”. Despite the potential for the US to experience significant impacts, it’s not a given that it will lose its global hegemony as a result. Bullies, like the US, often maintain their position due to the reluctance of others to confront them.
However, I agree that eventually, bullies can fall, but the process might not be immediate. For de-dollarization to occur on a large scale, China would need to decouple from the US, which would be a challenging process. While acknowledging the significant productive capacity and economic strength of China and other countries, it’s also important to consider that outside of the US, markets may not be large enough to sell all their production at current prices.
Both the US and China have accumulated considerable debt over the past 20 years, China’s debt levels increasing significantly. If China has to start selling to new markets at lower prices, it may not be able to service and pay off its debt effectively. Russia is an outlier in this scenario, as it hasn’t taken on much debt and possesses substantial natural resources, which has helped it weather sanctions and other pressures. As the world continues to decouple along East-West lines, I don’t think China can maintain its position as well as Russia has.
Louis Gave
I think on debt, for me I look at debt a little bit differently. The first big question is who’s on the other side of the debt – is it domestic or foreign? For example, if I borrow a million dollars from my dad, as a family, we don’t have any debt. But if I borrow a million dollars from Brent, I owe Brent a million dollars. When it comes to the growth of debt in the US and Europe, in countries like France, it’s increasingly owed to foreigners. This narrows policy choices compared to when debt is owed domestically. When you owe it to yourself, you can kick the can down the road for a very long time, as Japan has shown.
The other question is what is done with the debt. When I started in this business, the US government debt was USD 4.5trn. Today, it’s at USD 34trn. I always ask myself, what did the US get for that USD 30trn? Where are the major infrastructure projects like the Hoover Dam or the interstate highway system? A lot of that debt has gone to fund unproductive foreign wars and social transfer payments. Once you give benefits, you can never take them back. Infrastructure projects have a definite end.
Although there was a big increase in Chinese debt, the results were tangible in the form of visible infrastructure development. They’ve built high-speed rails, roads, ports, and airports. While the productivity of such infrastructure can be debated, it’s generally more productive than, say, funding a hip replacement for a grandmother.
When comparing debt, are we really talking about the same thing? I’m not 100% sure that we are. Here’s a critical point: economic activity is energy transformed. Most countries save US dollars to buy energy, especially oil. In the past, dollars were saved to buy Caterpillar machines and Ford trucks, but that’s no longer the case. Today, no one wants a Ford truck. If you want a Caterpillar, you’ll probably buy a LiuGong machine because it’s cheaper and just as good, if not better. For many industrial goods, you no longer need dollars, but you still need dollars for energy and commodities.
This brings me to the most significant macro development of the past 15 years that everyone seems to forget: the US became an energy superpower thanks to the shale gas revolution. The US added a Saudi Arabia in just 15 years. This, to me, is what has underpinned the dollar’s strength and the US bull market.
The fact that the US had a much cheaper cost of energy and more plentiful energy than anyone else for 15 years has been a significant factor in the dollar’s strength. The question now is, what happens over the next 10 or 15 years? If the US remains at the center of the next energy revolution and continues to have the cheapest cost of energy, the dollar will stay king. However, China is making leaps and bounds in nuclear energy, particularly in molten salt reactors, which I think are the energy of the future. China is also the leading provider in solar energy, by a long shot. If you believe in wind energy, I don’t, then Germany and Scandinavia could have a shot at being energy leaders.
If you think that in 10 years time, the US will still be the main driver of the marginal increase in energy in the world, then the US will stay king. However, this is not my belief, as the US has stopped investing in this field for the past seven or eight years.
Ronnie Stöferle
Do you think that at some point, organizations like BRICS or the Shanghai Cooperation Organization will decide to sell their resources in currencies other than the dollar? We’ve already seen some shifts in this direction, but it hasn’t yet become a major topic. So, what’s your view on that?
Louis Gave
We’ve transitioned from 0% to 20% of oil being priced in currencies other than the US dollar. Russia, being one of the top three oil producers in the world, has now moved away from the US dollar. The question remains whether the Middle East will follow suit. In the near term, looking at the next few years, it’s unlikely, due to their dependence on US protection, with the exception of Iran, of course. Iran has also moved completely to non-US dollar sales, selling its oil to China in RMB. China’s first goal was to obtain all its imported oil in its own currency rather than US dollars, and they’re more than two-thirds of the way there now, with Iran and Russia accepting 100% RMB for both oil and natural gas. They’ve also signed natural gas contracts with Qatar for RMB. China has made significant progress towards their goal, as they’re about two-thirds of the way on natural gas as well. This change is already important for them, as it allows them to pay for their oil in their own currency.
Once you’ve moved away from the US dollar, you’ve eliminated the most significant restriction on your growth, right? You can always print more of your currency and avoid international sanctions. China is about twothirds of the way there, but convincing Saudi Arabia to follow suit may be too much of a challenge. Instead, China is focusing on ensuring that the two-thirds they do have, is sufficient. That’s why they’re investing in nuclear, solar, and electric vehicles. By doing so, they aim to make the two-thirds of their energy needs they can obtain through these sources enough for their requirements. There’s a higher chance of this happening through nuclear, solar, and investments in pipelines to Russia and Kazakhstan than by convincing Saudi Arabia to change its currency preference.
Brent Johnson
My take on this is that the oil-for-dollars deal, which happened after the embargo in 1973, not only established the oil-for-dollars regime but also led to the exponential growth of the Eurodollar market. This growth occurred over the past 40 years when dollars were plentiful due to the United States buying oil from overseas by sending dollars out into the world. Fast forward to 10–15 years ago, the shale revolution made the US the largest energy producer in the world. This means we’re not buying as much oil from overseas, and as a result, we’re not sending as many dollars out into the world. Despite this, the Eurodollar market has grown to USD 30trn, with USD 80trn in derivatives and swaps. The Eurodollar market faces challenges as the US no longer exports as many US dollars due to the shale revolution. This situation is further complicated by increasing global divisions and national divorce. Where do the other countries get the dollars to buy the oil? The US is not exporting dollars to the same extent as before.
Louis Gave
China’s primary concern is facilitating transactions using the renminbi. You throw in the fact that Russia is a significant exporter of commodities, often ranking as the top or second in the world. When you consider kicking out Russia, it has had consequences. You move from 5% of the market not priced in dollars to 20%.
Talking about the US not exporting dollars, in 2023, the US current account deficit reached a record USD 880bn. This means the US is sending dollars abroad to service existing debt and purchase the commodities we need. So, the US is exporting dollars, it’s never exported this much before.
Brent Johnson
That is true, but not for oil, and we agree that energy prices are rising.
Louis Gave
The last time the US current account deficit was below USD 500bn was in 2006–2008, when the oil price was high. Since then, the US has had a shale boom, nearly eliminating its energy deficit. Everyone expected the US current account deficit to improve, and it did from 2012 to 2017. The US was exporting fewer dollars during that period.
However, since 2017, and especially since 2020, the US current account deficit has exploded due to increased fiscal deficits. The US is now running twin deficits of over 10% of GDP. Typically, when a country reaches twin deficits of over 5% of GDP, the IMF gets involved. The US being the US, they can withstand 10% for a longer time, but let’s not pretend that the US is not exporting dollars; it’s exporting them like crazy. For now, this hasn’t been a major issue for the dollar, as US equity markets have been a dominant destination for investments.
The US equity market has been a significant store of value, with seven stocks driving much of the market’s performance. However, if the US stock market stops being a reliable store of value, perhaps due to a decline, it could potentially release more dollars into the global system.
Brent Johnson
If you believe this divorce will not accelerate and instead lead to more cooperation, you’re right. However, if you’re like me and think the divorce will accelerate with more trade barriers and sides being chosen, I don’t believe China will be able to sell all of their production at the current price. They may sell at a lower price in markets dependent on the United States. I don’t think the US can have a recession without the rest of the world feeling it. That’s where we may disagree. The countries you mentioned sell to the US, and the whole world is connected. You can’t simply say they don’t use the US anymore.
Louis Gave
I believe the main difference in our views lies here. Most Westerners believe that if China can’t export as much to the US, it’s in trouble. However, China is the largest car exporter globally, yet we don’t see these cars on US streets? The answer is zero. These cars are sold to countries like Indonesia, Saudi Arabia, and Chile. The trains, turbines, solar panels, nuclear and thermal power plants that China sells are not being sold in the US . They are increasingly sold across emerging markets. The growth in trade is happening primarily between emerging markets, particularly between China and emerging markets. As a result, China’s dependency on the US decreases every year.
A decade ago, China was significantly dependent on the US, but this is no longer the case. TikTok serves as a perfect example. When the US demanded that China sell TikTok, they responded by saying it’s only 17% of their business and they would rather shut it down than comply. This shows that China is willing to face consequences in the US to maintain their stance.
The view that China would be in trouble without the US is a US-centric perspective that may have been true 10 years ago, but no longer reflects the reality of China’s trade flows today.
Ronald-Peter Stöferle
Gentlemen, I thank you for this very inspiring debate!
[1] Over the past few years, Niko Jilch has contributed numerous articles to the In Gold We Trust report. He works as a financial journalist and podcaster. You can follow him on www.nikojilch.com, X, and YouTube, among others.
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