This can be solved easily with manufacturing returning in abundance to our shores. It may result in higher prices for goods, however, quality is the benchmark we got rid of for quantity. i.e. China, India, etc.
South Africa this week will take some initial steps to unseat the US dollar as the preferred worldwide currency for trade and investment in emerging economies.
Thus the nation is expected to become party to endorsing the Chinese currency, the renminbi, as the currency of trade in emerging markets.
This means getting a renminbi-denominated bank account, in addition to a dollar account, could be an advantage for African businesses that seek to do business in the emerging markets.
The move is set to challenge the supremacy of the US dollar. This, experts say, is the latest salvo in the greatest worldwide currency war since the 1930s.
In the ’30s, several nations competitively devalued their currencies to give their domestic economies an advantage over others.
And this led to a worldwide decline in overall trade volumes at the time.
The north will be pitted against the entire south in a historic competitive currency battle — whose terrain has moved to the Indian capital, New Dehli — where the Brics (Brazil, Russia, India, China, and South Africa) nations will assemble next week.
China seeks to find new markets for its currency and to lobby to internationalise it throughout the Brics states.
For China this is not a new game. In 2009 senior Chinese banking officials issued a statement that the international monetary system was flawed owing to an unhealthy dependence on the US dollar, and they called for a “super-sovereign” international reserve currency.
Experts say Beijing’s first step is to internationalise its currency (by expanding its reach beyond China), liberalise it (to allow its value to be determined by the market instead of actively managing it as they currently do), and then make it a reserve currency for many nations in the developing world.
Africa’s largest bank, Standard Bank, says in a research document: “We expect at least $100 billion (about 768 billion rand) in Sino-African trade — more than the total bilateral trade between China and Africa in 2010 — to be settled in the renminbi by 2015.”
The bank anticipates that the use of the renminbi will lower transaction costs in Africa, thus lowering the barriers to doing business.
It also says that the Chinese will be more successful in transacting in renminbi in Africa than anywhere else because most currencies are weak and somewhat localised.