China has been able to progress so well due to strong ruling. Now that it has prospered, there is no reason as to why it will not convert to democracy. Once that happens, it will have the respect that it deserves in the world market to accept its currency as the world currency. This century belongs to China.

The world will never adopt Yuan as a global currency, regardless how strong China’s economy is, for a very simple reason. Currency is a by-product of government and its political systems. Currently, China government and its political systems cannot guarantee the fairness, as well as checks and balances, within its government and political systems. What will stop China’s government from becoming extreme as Kim Jong-Il of North Korea? Nothing. That is the uncertainty the World will not accept. Government and political reforms are the steps China must take before China can or try to change world’s events.

As aptly put by Mr. Geng Xiao, China needs to reform “structural distortions and inefficiencies” — key to making RMB the next global currency for foreign reserves.

This kind of comment is typical of how the Chinese leadership intends for the world to adapt to China while not making any effort to adapt to the world. However, a global currency like the dollar is much more than the currency of the largest economy. It is a store of value because of everything that the sovereignty of the United States embodies, from the ideals of its founding fathers to unparalleled military might. Attaining global leadership will demand much more of China than just keeping up GDP growth. Can one really imagine replacing the portraits of George Washington or Ben Franklin with that of Mao Zedong?

This captures only a China-centric view; the new global currency market domination if it moves out from dollar could be just not based on RMB. There are other emerging economies and they will also have a say and interest in their currencies’ strength. China has to be democratic if it’s currency has to provide the kind of visibility this article alludes to—free market flow.

In the long run, China will become a well-developed market and the most powerful economic zone. Therefore, RMB will replace USD as a global currency. However, this situation will depend on how far Chinese government progresses in law and political reform.

Renminbi wont be a global currency until the following occurs: China has property and contract laws that are enforced equally for all parties, USD composes less than 80% of all financial instruments globally, and the US government fails to control inflation. Meanwhile it (RMB) will remain an easy trade as “loose lips sink ships” about the government’s direction of a planned economy.

An extremely focused and thought provoking interview indeed. I just have a few comments to offer. The US dollar has more worries than just those mentioned by Xiao. It is a currency that, along with the pound, ruled the commercial space for more than any one can remember. Yet we saw both those economies take a major tumble and triggered off a global crisis of sorts.

Why were India and China spared the agony it has a deeper cause and effect formula than meets the eye. What seemed to be the bane of these two economies—namely corruption and a parallel economy—prevented any downturn. Also the socioeconomic ethos in India and China prevent the creation of a credit society. Credit borrowings at the social level will always end in a correction from time to time which trigger recession-like conditions. The balance of payments and trade traditionally would decide the exchange rate parity, surpluses historically carried by the US and Europe as well as Japan cannot be wished away.

However, the significant point to be noted is that we are moving away from production being the most value creating activity in the entire chain of industry. With the entire world unanimously voting for a peaceful war free planet, the armament industry is likely to be hit sorely. Dependence on fossil fuel being rapidly reduced will bring everyone on a level playing field. Under these futuristic scenarios, the shift in value-creation activity will move to the services sector and the knowledge management arena. This is the writing on the wall which will take India and China—the two countries who between them will own more than 50 percent of the world’s productive workforce in the next 10 years—into a position of global advantage and a dramatic shift may be witnessed in the shift of trade balances.

I may be an optimistic Asia lover, but on a realistic level even if the western economies start reacting now, social fabric takes much too long to alter, to be able to stem the rot. While I agree that both India and China are in no way competing with the dollar today, I wish to add that the day is not far when this competition will be a reality. President Obama is already stressing education as a means to protect the American future, George Bush had warned young children, urging them to take languages seriously, otherwise the Indian kids will take their jobs away. The earth is round, history repeats, and Marco Polo’s silk route will flourish once again.