100 sats \ 0 replies \ @tomlaies 29 Apr 2023 \ on: What's going on with China? bitcoin
"BRICS" hardly exists as a real world concept. It's really just China and the other emerging markets. Here is a rough overview over how they intertwine economically:
- Especially after the GFC the economy of China has become very resources hungry. China went from the cheap labor manufacturing center to an economy with large infrastructure projects and own production lines that were not just outsourced foreign structures.
- Brazil, South Africa, Argentina (also Russia more and more now)etc. were on the way of developing from resources/agrarian to industry before the GFC but the huge demand for resources made a lot of their economies drift towards exports of these
Thus if these countries would keep trading in dollars China would need to acquire a lot of dollars and other BRICS would keep getting dollars that they would in return exchange for more consumer goods. There is an interesting episode about this dynamic on Bloomberg right now: https://www.bloomberg.com/oddlots
If you think about this, that means no country in this triangle is in a happy geostrategical position: The US doesn't want to have a lot of their dollar flow to China, China doesn't want to acquire dollars from the US and other emerging markets don't want to export low value stuff for importing high value stuff. It just make sense for China to not only move away from the dollar but also to diversify the directions and currencies of money flow.