What is the Future Role of the Chinese Currency in Global Financial Markets?

China's economic and diplomatic ascendancy over the past decade has been nothing short of phenomenal in terms of world history. It has seen its influence on the world stage grow from being a bit part player at the start of the 20th century, when its territory sovereignty was encroached upon by the European colonial powers and Japan mounted a campaign of conquest, to being seen as the biggest strategic threat to American primacy in the global economy. This view of China as an economic threat has been reiterated recently by various key figures in the United States administration, with calls for a revaluation of China's currency in light of the huge trade deficit the United States has with China. The United States acted on both trade and financial fronts in order to urge Beijing to revalue; in the former, with the implementation of restrictive quotas on certain categories of textiles and garments, and heavy anti-dumping duties on Chinese made TV sets, shoes, furniture and socks, and in the latter with former Treasury Secretary John Snow and former Federal Reserve Chairman Alan Greenspan repeatedly urging Beijing to revalue or move to a flexible exchange rate regime. Although this paper will focus to an extent on the debate about China's valuation of its currency and its effects on the global economic imbalance, it is the aim of this author to attempt an examination of the role the Chinese currency has played in the recent past, its current effect on the global economy and the potential impacts it will have on financial markets in the future.