New mutual-trade plan by both nations is fresh blow to the dollar
In line with a new Moody's Investors Service warning to the U.S. to get its debt under control, prominent figures in both China and Germany have followed suit with their own critical observations.
Li Daokui, a former Chinese central bank adviser, said
: "My biggest worry is when the Europeans are done with their reforms, the world's financial sector will focus their attention on the U.S. numbers ... and their numbers aren't as pretty as the Europeans'," said Li, who was as an adviser to the People's Bank of China until March this year.
Meanwhile, German Finance Minister Wolfgang Schaeuble questioned
on Tuesday how the United States could deal with its high levels of government debt after November's presidential election. "Ahead of the election in the United States there is great uncertainty about the course American politics will take in dealing the U.S. government's debts, which are much too high," Schaeuble said. "We need to remind ourselves of that sometimes and the global economy knows that and is burdened by it."
Accordingly, in late August, Germany and China announced they plan to conduct an increasing amount of their trade in euros and yuan, according to a joint statement after talks between Chancellor Angela Merkel and Chinese Premier Wen Jiabao in Beijing.
"Both sides intend to support financial institutions and companies of both countries in the use of the renminbi and euro in bilateral trade and investments," said the text of the statement.
It also said that both parties welcomed investments in China's interbank bond market by German banks and supported the settlement of business in the yuan by German and Chinese banks and the issuance of yuan-denominated financial products in Germany.