De-dollarization?
Commentary
The potential U.S. debt ceiling and U.S. dollar status problems reignite the discussion of de-dollarization. The status of U.S. dollar will no doubt be firmly anchored in the financial market, which has already been discussed here previously. But the U.S. dollar share of goods trade is claimed to be jeopardized by the Chinese mouthpieces and some international bodies recently. For foreigners, one camp expresses this openly to please the Chinese Communist Party for more business. Another camp might have this thought based on recent observations.
There are at least two observations to consider. First, China did get more trade partners invoicing in their bilateral currencies (non-U.S. dollar), and second, China and some of her trade partners did have a higher share of goods trade invoicing in their bilateral currencies. Yet there are subtleties here. On the first point, most newly joined countries are very small in economic size or even on the brink of some sort of crisis. On the second point, the share of non-U.S. dollar goods trade is still very small, although it has been increasing in some of these countries, mainly at a few percentages level….