Julia Gillard, Australia’s Prime Minister, visited China last week to negotiate a currency conversion agreement with China and to reassure China that its expanding military ties with the U.S. should not pose a problem to China’s interests.
The agreement would help position the Chinese yuan on a more focused path towards full convertibility on global markets. At present, the U.S. dollar serves as the world’s reserve preferred currency for trade and serves as the intermediary between Chinese and Australian trades. Australia’s move to secure a conversion deal with China may dampen the reign of the U.S. dollar as currency of preference for trading matters.
Gillard’s visit also aims to alleviate any unrest China may have in regards to Australia’s new defense agreements with the United States these past few years. The Australian PM noted that there was no competition between the United States and China for Australia’s allegiance. However, political critics claim that Australia is in the “Asia Century” believing that Australia’s economic well-being is tied to China, which happens to be its leading trading partner.
How do you think Australia’s visit to China will affect U.S. interests? Weigh in with your thoughts in the comments section below.
Hmmm, China and Australia have been strong trading partners for a while…whereas I am not sure of how the US and Australia are partnered. Maybe military ties? But the US navy is being cut back (there is talk of closing a shipyard or two) and the dollar is weakening – not to mention, China is much closer to Australia than the US – so I think it is safe to say that the Australia cares more about China. Then again, I think the US cares more about China too. I just hope that the US backs away from the Pacific, instead of holding onto military bases in order to monitor China and other countries…
lol, isn’t this over analyzing?
@Anon – Thanks for your comments! You bring up interesting points about US military involvement overseas. Regarding your question, you are correct that Australia does have military ties with the U.S. (also mentioned briefly in this Newsmaker). I am not entirely sure that Australia cares more about China than the US – or at least that type of comparison is very difficult to gauge. That said, should Australia successfully negotiate a deal with China to eliminate the USD as an intermediary currency in exchanges, this may stir up some controversial results in the long run…
@Kyu – Were you referring to Anon’s comments or the newsmaker itself?