The Regional Comprehensive Economic Partnership Agreement (RCEP) and the Future of the US Dollar

“The dollar is our currency, but it’s your problem.”

– John Connally, former US Treasury Secretary


After several years of negotiations, a regional trade and economic agreement—the Regional Comprehensive Economic Partnership (RCEP)—was signed by 15 Asia-Pacific nations on November 16, including China, Japan, South Korea, Australia, New Zealand and all 10 members of the Association of South East Asian Nations (ASEAN). The RCEP agreement was signed in Vietnam during current period of the COVID-19 related economic depression. The combination of the global health pandemic, crisis of global warming, the global economic downturn, the weaponization of trade and finance and instability generated by the US political system, along with systemic racism continues to point to the necessity for a new international monetary and financial system (IMFS). For decades forces of both nationalist and progressive natures in Asia and the nonaligned world have been calling for the restructuring of international finance and now in the midst of COVID 19 the RCEP agreement, as one new step in the ongoing evolution of Asia’s trade and financial architectures, will serve as another action-forcing catalyst shaping the agenda in a post dollar world.

Very soon after the Asian financial crisis in 1997/98 the countries in the Association of Southeast Asian Nations (ASEAN) region[1] served as a regional center for Asian nations to explore pathways to escape the conditionalities of the IMF and the clutches of the US dollar, and build Asian led alternative institutions and frameworks such as the Chiang Mai initiative and the basic building blocks for the Asian Currency Unit. The Chiang Mai initiative (CMI) began as a series of bilateral swap arrangements after the ASEAN Plus Three countries (China, Japan and South Korea) agreed at the annual meeting of the Asian Development Bank that the countries should cooperate to manage regional short-term liquidity problems and to reduce their reliance on the International Monetary Fund for both macroeconomic surveillance and financial support. After the 2007/8 crisis when the US resorted to Quantitative Easing (QE) printed trillions of dollars to save Wall Street and the private equity elements, but sought to impose austerity based policy approaches to economic recovery in Asia, the CMI created a pool of foreign exchange reserves worth US$120 billion. This CMI foreign exchange pool was launched on 24 March 2010. That pool has been expanded to $240 billion in 2012 in what was then called the multilateralization of the Chiang Mai Initiative (CMIM).

Since the Global Financial Crisis and the printing of dollars under Quantitative Easing (QE), the governments of the ten ASEAN countries and their six preferential economic cooperation and trade partners in the region had been negotiating the Regional Comprehensive Economic Partnership (RCEP) to strengthen economic cooperation in Asia. The agreement, based on a negotiating framework drafted by ASEAN’s ten trade ministers (not China), was signed on November 16, 2020. The agreement includes the ten ASEAN States Plus five (China, Japan, South Korea, Australia and New Zealand) and reflects an Asian led approach to deepening regional economic integration by removing intra-region trade barriers and setting common Rules of Origin to create a more optimized and predictable liberal regional trade and supply chain environment for both goods and services. The agreement covers fields such as intellectual property rights protection and competition policies and have broader and deeper engagement with significant improvements over the existing FTAs between ASEAN and its partners while recognizing the individual and diverse circumstances of the participating countries.

One of the unspoken aspects of the reporting on the RCEP was the fact that this agreement was one more step towards deepening economic cooperation between the ASEAN region and other parts of Asia without the USA. More importantly, this agreement strikes another nail in the coffin of the USA as a leader in international trade policy rulemaking in Asia. The RCEP, the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and the Asian Currency Unit are three efforts that will in the short run have implications for the future role of the US dollar in the region of Asia.

Throughout the period of the financial implosions since 1997, the US dollar remained the major reserve, vehicle and anchor currency of the region. Ardently, with the development of capital markets in places such as Singapore and the use of currency swaps and crypto currencies, the dominant role of the US dollar has been diminished as the states moved away from the idea of an anchor currency for the region. Slowly, both the Chinese and Japanese economic leaders have come to see the benefits of autonomously driven regional economic, trade and financial architecture development, without the USA. White racism in Australia ensured hedging about its future place in the economy of Asia.

As if to ensure that there would be even greater incentives to continue to deepen cooperation among the countries of the ASEAN region in 2021, the US Department of Treasury had determined that under the Omnibus Trade and Competitive Act of 1988, Vietnam, one of the most successful economic developing nations in the world, is a currency manipulator and could be subject to unilateral trade countermeasures by the US government. After recovering from the destruction of the war that had rained bombs from the sky and despoiled humans in villages, Vietnamese leaders were confronted with the belligerency of a US government that wanted to dictate the geo-economic choices for the Vietnamese peoples. Countries such as Vietnam and Indonesia that had suffered from the ‘Jakarta Method’ intensified efforts to foment cooperation in Asia independent of China and the USA. Yet, the US commentators in their intellectual blinders had identified the RCEP as ‘China led.’

The strengthening of regional monetary institutions like the ASEAN+3 Macroeconomic Research Office (AMRO) and the coming into force of the RCEP pose a direct threat to the dominance of the US dollar as the currency of trade in the Asia Pacific region and beyond. Since the seventies, progressive scholars from the region have been pushing the calls for a New International Economic Order (NIEO) along with calls for the demilitarization and denuclearization of the South China Sea and Asia Pacific region.[2] These calls for a NIEO had intensified after the three big financial meltdown in the twenty-first century. By 2020, even the governor of the Bank of England had joined in the call for a new international monetary and financial system declaring that, “The deficiencies of the international monetary and financial system have become increasingly potent…. Even a passing acquaintance with monetary history suggests that this centre won’t hold.” [3]

Instead of seeking to collaborate with this group of scholars, the mainstream intellectuals in the USA have been writing about the so-called ‘Thucydides trap’ [4] and calling the RECEP a ‘China led initiative.’ It is this intellectual impoverishment of the ruling elements (liberal and conservative) that is now being deployed to support the Pentagon and the push for confrontation with China. The argument here is that the progressive forces need to wean themselves from the ideas about the US led international system and the military management of that system. The COVID-19 pandemic has opened new possibilities for international cooperation in medicine, combating climate change and international finance with a robust anti-racist agenda. With the coming of a new administration in January 2021, the contradictions of global capital will dictate that progressive forces must intensify the calls for the limits on US military expenditure and to support efforts at establishing a new international financial architecture to replace the World Bank and the International Monetary Fund.


The RCEP – signed on November 16 between China, Japan, South Korea, Australia, New Zealand and the 10-member Association of Southeast Asian Nations (ASEAN) strengthened what is now considered the world’s largest trading bloc. After 8 years and four rounds of negotiations, in the middle of the COVID-19 pandemic, at the ASEAN meeting in Vietnam, the leaders agreed to accelerate Northeast Asian economic integration. The agreement will cover goods and services, investment, intellectual property and electronic commerce. The RCEP has registered a major step towards creating a more coherent trading zone in the Asia Pacific region surpassing the economic cooperation, while setting up the conditions for bringing about an Asian alternative to the Euro and the dollar as the dominant currencies of international trade (in Asia).

The weaponization of trade in the era of global supply chains had created a contradictory trading situation in the world. Global capital, especially US digital corporations had benefitted tremendously from creating production platforms and global supply chains that were dispersed all over Asia. Intel and Apple were two companies that had become proficient in this form of distributive production system. The Robert Lighthizer rhetoric about America First and the ideas of Professor Peter Navarro on Death by China [5] had not prepared corporate America to the kind of collaboration that was brewing in Asia. Yet, the Trump America First policy (with unilateral sanctions) was only one manifestation of the ways in which the so called US led international system had been overtaken by the reality that the ‘rules based’ systems of the WTO, IMF and WHO were now dysfunctional for the future of humans. It is worth quoting extensively on the establishment of a single rule of origin from the original documents of the Agreement to grasp how the countries of the RCEP region sought to get around the threats posed by the Trump policies and the Lightizer/Navarro ideas.

As the Asian Trade Center explained,

“once a product is created to meet RCEP originating criteria, the rules are the same for all 15 member economies.” This will simplify content calculations for businesses and streamline supply chains. To illustrate the benefits of a single rule of origin, consider this example from the Asian Trade Center, involving a hypothetical shampoo manufacturer from Singapore (which is an ASEAN member):

‘If the firm wanted to send a bottle to South Korea, it may need to ensure that it adds more Korean ingredients to meet rules of origin under ASEAN/Korea.

If the company got an order from Japan, it may not be able to use the same bottle, because the Korean ‘content’ would not count. It may need to be swapped out for Japanese raw materials instead to qualify for lower tariffs under ASEAN/Japan.

If a staff member in Singapore accidentally shipped the Japanese content bottle to Korea and claimed FTA preferences under ASEAN/Korea, the firm could be liable for mis-declaration with potentially significant fees and penalties.

Under RCEP, however, the shampoo company can make shampoo safe in the knowledge that—as long as the content in the bottle comes from anywhere in the 15 markets in Asia meeting the ROOs for RCEP—it can be shipped to any of the 15 markets in Asia without any changes in formulation. Given the size and diversity of these markets, this is a significant advantage to all Asia-based firms.

Even better, under RCEP, firms will need to fill out only one sheet of paper to prove that their products ‘qualify’ for origin. The new RCEP certificate of origin (CO) should reduce costs and time for companies.”

According to the same Asian Trade Center, only 40% of RCEP content is required for goods to be considered of RCEP origin. This surprisingly modest amount still allows for 60% content to be sourced from outside Asia. This could provide interesting opportunities for companies pursuing a “China plus one” strategy (provided the “plus one” is not an RCEP country).”

The important point about this agreement in the context of trade wars is that it allows room for manufacturers to continue the kind of supply chains that have been at work for the benefit of capital. The result is that the RCEP makes it much easier for Asian firms to send goods to 15 Asian economies, allowing for more regionally integrated supply chains. A country such as Japan has calculated that its trade relationship with the ASEAN countries and Korea is in its short and medium term in their best interest. Before the RCEP, Japan could not actually get a trade agreement with China and Korea because of the bitterness from the last global war 1939-1945. RCEP is the first time that the three combatants of the last global war —China, South Korea and Japan—are part of the same trading bloc. The bitterness from that period had excluded the Japanese from real free trade agreements with China and Korea. By Japanese government estimates, the new trade agreement will eliminate tariffs on 91 percent of goods between the three countries. Some 92 percent of Japanese items exported to South Korea will now be tariff-free, as compared to only 19 percent previously, as will 86 percent of items exported to China, up from 8 percent.

Isolation of the United States

The RCEP region covers a community of 2.2 billion people, or almost 30 percent of the world’s population, with a combined gross domestic product (GDP) of 26.2 trillion U.S. dollars or about 30 percent of global GDP, and accounts for nearly 28 percent of global trade. According to figures produced by UNCTAD, the US accounts for only 10 per cent of global trade and 15 per cent of global GDP but half of trade invoices and two-thirds of global securities issuance. The US dollar had functioned as vehicle currency within the ASEAN region even though the amount of trade in the region doubled that of US global trade. Movements in the US dollar before this agreement were fundamentally important to other the member countries of the ASEAN region even if they have few direct trade links with the US. As the dominant international reserve currency, the countries were forced to self-insure and hoard dollars to guard against potential capital flight, leading to excess savings and lower global growth.

In a region with three major international currencies, the RMB, the Japanese yen and the Australian dollar, the creative swap arrangements and trade settlement programs encouraged many members of the RCEP to begin to go down the path of diversification of their holdings of safe assets away from the US dollar. Such a push for diversification of assets have been fueled by the weaponization of finance by the US Treasury, especially the Office of Foreign Assets Control (Ofac).

When the negotiations for the RCEP had begun, India had been an active member of the BRICS formation and an enthusiastic advocate for the (Brazil , Russia, India, China, South Africa ) BRICS bank, in order to break from the dominance of the dollar. Since the Modi government in India, after the first three rounds of negotiations, India, (driven by the chauvinism encouraged by the Trump administration) had pulled out of the RCEP negotiations in 2019, citing concerns that its manufacturers would not be able to compete with Chinese good. In reality, its political leadership had succumbed to the idea that an alliance with US militarism would make up for the economic inequalities and impoverishment in India.

Indian leaders had invested the future of their country in the Quad — the Quadrilateral Security Dialogue – comprising of the US, India, Japan and Australia. This Quadrilateral Security Dialogue had been the brainchild of the Japanese Prime Minister Shinzo Abe, who had inspired this formation as an anti-China front in Asia. By the time of the Trump administration, the US militarists had begun to see the Quad as the Asia Pacific NATO, but these militarists have forgotten that Germany has been able to manage its relationship with the USA, and supporting an alternative currency, even while being a member of NATO. South Korea, which like Germany is an occupied country is also learning to manage its relationship with the USA and has stood aloof from the Quad.

US ‘strategic thinkers’ who had been writing long treatises about China as a threat to the USA in a New Cold War had devised formulations to support this idea of militarism under the banner of a Free and Open Indo-Pacific (FOIP) vision. This FOIP vision repeated the shibboleths of US capital about the US government supporting an open, inclusive, peaceful region. This FOIP vision that had been promoted by institutions such as the Brookings Institute and the RAND Corporation flew in the face of the unilateral trade war unleashed against China and the drumbeats of war that had been initiated since the Obama administration’s pivot to Asia. Under the US policy of the pivot to Asia, military alliances with Japan, South Korea, Australia, the Philippines and Thailand were to be deepened and revitalized, while military collaborations with Indonesia, Vietnam, India and other nations reinforced.

Prior to the Trump administration and the Trade war unleashed by the USA against China, the USA had been spearheading the Trans-Pacific Partnership in order to isolate China in the Pacific zone. However, after the 2016 pull out by the US government, the eleven other countries found the agency and collective interest to move forward without the USA and signed the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP).[6] India and the United States were to be members of RCEP and the CPTPP, respectively, but withdrew under the Modi and Trump governments. The signing of the RCEP effectively isolated the USA and India. As one commentary noted:

“The agreement seems to have effectively killed the QUAD as well. As against militarising the Quad in an anti-China move, two major members of the organisation, Japan and Australia, have entered into a trade pact that is inevitably going to raise the existing level of regional and mutual interdependence — something that defies the need for greater militarisation.”

When the RCEP was signed the New York Times carried the headline screaming, “China-Led Trade Pact Is Signed, in Challenge to U.S.”[7] This mistaken understanding of the dynamics within Asia emanated from well financed anti-China propaganda cottage industry in the USA to help feed the “endless war and threat” mentality to justify the taxpayer funded multi trillion dollar per year welfare check to the military/financial/ information complex.

Organizations in the USA that benefit from the supply chains in Asia took a different position on the RCEP and the US-ASEAN Business Council (US-ABC) and its members congratulated the Socialist Republic of Vietnam for successfully kicking off the 37th ASEAN Summit and Related Summits virtually and for shepherding the last stages of the signing of the agreement. Analysts from the US-ABC noted that RCEP, labelled inaccurately as “China-led,” is a triumph of ASEAN’s middle-power diplomacy. The value of a large, East Asian trade agreement has long been recognized, but neither China nor Japan, the region’s largest economies, were politically acceptable as architects for the project. The stalemate was resolved in 2012 by an ASEAN-brokered deal that included India, Australia, and New Zealand as members, and put ASEAN in charge of negotiating the agreement. Without such “ASEAN centrality,” RCEP might never have been launched. India is now outside of a new important trade bloc, but the agreement has been structured so that in future India could rejoin this RCEP process.

Centrality of Vietnamese diplomacy

The splendid isolation of the USA outside of the new emerging trading blocs was most visible in the virtual signing ceremony which was beamed from Vietnam. General Secretary of the Communist Party and President of Vietnam H.E. Nguyen Phu Trong had opened the first session of the 37th ASEAN Summit on the morning of 12 November by emphasizing the spirit of a cohesive and responsive ASEAN need for multilateral collaboration in tackling unprecedented challenges of a global health crisis and regional instability. Despite the historic political differences between China and Vietnam, the peoples of Vietnam were front and center in the signing in the face of the belligerence of the Trump administration against Vietnam. In responding to Trumpists in North Carolina the US Trade Representative (USTR) had launched an investigation against Vietnam about illegal trading practices in their furniture business. The USTR had claimed without evidence that Vietnam’s booming furniture exports were built on timber “harvested against the laws of the source country” or taken from protected lands in countries like Cambodia, Laos, Cameroon and the Democratic Republic of Congo.”

In 2020 the U.S. imposed duties on Vietnamese tires over undervalued currency. The U.S. Commerce Department slapped preliminary countervailing duties of 6.23% to 10.08% on imported light vehicle tires from Vietnam, applying for the first time a new rule to combat undervalued currencies. In the context where the US wanted the dollar to dominate the Asia pacific region, Vietnam had been on Washington’s watchlist of currency manipulators because of its trade surplus with the United States, a large current account surplus and a perception that its central bank has been actively buying foreign currency. One of the ironies of this belligerence of one section of US capital against Vietnam, was that other sections of US capital had relocated to Vietnam in the face of the unilateral sanctions of the US against China.

Similarly, Indonesia with the largest population in the region outside of China was enthusiastic about RCEP and declared that the region should move back to the Bandung spirit to “avoid any defence tie-ups that serve the interests of the big powers.”[8] With many citizens still alive with the memory of the Jakarta Method,[9] Indonesian officials opposed the multiple high-level approaches of the “United States in late July and early August to Indonesia’s defence and foreign ministers to grant landing and refueling rights to its P-8 Poseidon surveillance aircraft.” In the face of the pugnacity of the Trump administration and the revelations of the corruption of Goldman Sachs in the 1MDB scandal in Malaysia where more than US $4.5 billion went missing, [10] the aggressive and belligerent tour of Mike Pompeo in Asia in 2020 did not endear the people of Asia to the USA, especially in the era of COVID-19 when the world was seeking greater international cooperation.

It was therefore not accidental that the principal issue before the ASEAN summit before the signing of the RCEP revolved around regional COVID-19 response and recovery plans. This ASEAN summit resulted in the endorsement of the ASEAN Comprehensive Recovery Framework. China’s premier Li Keqiang described the agreement as “a victory of multilateralism and free trade.” The English language paper, the Global Times stated in a headline that “RCEP will end US hegemony in West Pacific.” The new agreement, it declared, “sends out the message that Asian countries do not want to choose sides between the US and China” and “represents the failure of the Trump administration’s attempted encirclement of China in the western Pacific.”

Space does not allow for a full elaboration of the full scope of the agreement relating to Tariffs, Rule of Origin, Services and Investments. The summary of the ten chapters covered by the agreement can be found on the ASEAN webpage.  What is of importance for this commentary is the way in which RCEP has accelerated the pace to a post dollar world.

The RCEP and the implications for the US dollar

In the previous 2007-9 economic downturn, the Poorer Nations had looked askance as the US Federal Reserve bailout commitment in excess of US $29 trillion went to save the financial system.[11] The countries of Asia decided to sign the RCEP agreement knowing full well that the USA will again seek to pass on the cost of the recovery of capitalism from the COVID-19 pandemic on the backs and shoulders of the oppressed peoples of the World. It was in 1971 at the time of another setback for global capital when the US broke its commitments made at Bretton Woods, when the US Treasury Secretary had declared to the European leaders that, “The dollar is our currency, but it’s your problem.” Then, the USA could bully the leaders of Western Europe while fighting a war against the struggles for self-determination by the peoples of Vietnam. In 2020, the USA had launched a new war against the peoples of Vietnam with the Trump administration labeling the government of Vietnam a ‘currency manipulator.’ This new economic war against the peoples of Asia energized the social forces that wanted to break with dollar hegemony in Asia. Citizens of Asia would not be bullied when the US government had launched trade and currency wars. In the era of the weaponization of everything, John Connally’s dictum “our dollar, your problem” has broadened to “any of our problems is your problem.” Countries such as Malaysia, Vietnam and Indonesia were not wiling to accept this mantra.

Among the leading scholars on international currencies (Barry Eichengreen, Benjamin Cohen, etc) in the capitalist West, few have fully interrogated the centrality role of militarism for currency hegemony and the logical outcomes of the weaponization of everything. It devolved to the intellectuals from the nonaligned world (such as Samir Amin, Walden Bello and Jomo Kwame Sundaram) to provide the intellectual and political insights about the weaponizing of dollar that had been deployed in order to pursue the geo-political objectives of US capital. Politicians such as Mahathir Mahathir bin Mohamad of Malaysia have taken these intellectual insights further to refine the kind of self-reliance and economic resilience that had been deployed in Malaysia since 1997 and supporting the deft negotiations that ended up as the RCEP. In this way the political and economic leaders of Asia worked hard to minimize the social impact of the collapse of the US management of its health infrastructure. This collapse had sent a clear signal on the kind of society the USA represented.

The planning for the Asian financial self-reliance unit is following the lines of creating a firewall in Asia to protect the societies from the digital, trade and currency wars being waged by the United States. The militaristic approach of the US economic planners is providing one snapshot of the digital wars that are forthcoming in the era of Artificial Intelligence. While investing more than a trillion dollars in pork projects such as the F-35 aircraft, the USA fell behind Korea, Japan Germany and China in the rollout of fifth-generation telecommunications (5G) technologies. Studies by investment companies have demonstrated Asia will contribute the bulk of global 5G mobile subscriptions through their 10-year forecast period. These studies have highlighted how all aspects of life, commerce and finance will be driven by the new technologies.[12] One of the future requirement will be for the ASEAN region to develop a clear policy on the blockchain technologies behind crypto currencies. These policies will buttress the elementary challenges to the western dominated Society for Worldwide Interbank Financial Telecommunication (SWIFT) payment system. China has been tiptoeing into this arena with the rollout of the Cross-Border Interbank Payment System (CIPS) in 2015.

The Bank of England has been promoting a new payments infrastructure involving crypto currencies that would rescue the pound while slowly replacing the dominance of the dollar. This new payment system dubbed a new Synthetic Hegemonic Currency (SHC) would be supported through a network of central bank digital currencies. It is in Asia where this network of Central Banks already exists. In the words of the Governor of the Bank of England, “widespread use of the SHC in international trade and finance would imply that the currencies that compose its basket could gradually be seen as reliable reserve assets, encouraging EMEs to diversify their holdings of safe assets away from the dollar.”

One major tipping point towards greater cooperation has been the arbitrary ways in which the US Treasury’s Office of Foreign Assets Control (Ofac) administers and enforces economic and trade sanctions. Even the allies of the USA in Europe have found that OFAC in its statements and regulations leave “plenty of grey areas” which means multinationals need to be “very conservative and stay as far away from those grey lines as possible. In Europe, international capital not only had to contend with the deployment of US sanctions, but they also had to navigate EU rules that can make it illegal to comply with the American measures, leaving them caught in the geopolitical crossfire. In order to strengthen its relationship with China, in December 2020 the European Union completed the EU-China comprehensive investment agreement. This EU China investment agreement had been on the table since 2013 but with the RCEP agreement, the European Union wanted to cement the “Comprehensive Agreement on Investment” with China before the hawks from the WestExec Advisors and Center for a New American Security (CNAS) were sworn into their positions in the incoming Biden Administration. The loud but ineffective trade war against China had been heralded in the West, but less known was the machinations of the North Carolina furniture manufacturers against a society such as Vietnam. Within ASEAN states bilateral pacts to swap and repurchase central-bank reserves have prevented the kind of raiding that went on at the time of the Asian financial crisis 1997-1998. These societies in Asia do not agree politically and have many differences but they are all agreed to establish various initiatives to ensure that their societies are not intimidated by the IMF or the World Bank.

With the establishment of the Chinese backed Asian Infrastructure Investment Bank (AIIB) the political leadership in Beijing had dropped its earlier stance of only entering into bilateral relations with the member states of ASEAN and committed to a financing platform for Asian countries in the infrastructure construction requirements of the region. The AIIB, the BRICS New Development Bank and the RCEP will strengthen the elementary cooperation unleashed by the Chiang Mai Initiative Multilateralisation (CMIM), deepen trading settlement of local currency under the multilateral framework, setting up new development banks and foreign exchange emergency reserves of BRICS and introducing them to more developing countries and emerging economies in Asia-Pacific.

RCEP and financial cooperation in Asia

The weaponization of finance in the past ten years has intensified efforts at financial cooperation in this region. Regional financial cooperation, under the ASEAN+3 Finance process, includes the CMIM, ASEAN+3 Macroeconomic Research Office (AMRO), and Asian Bond Markets Initiative (ABMI) are but the more overt expressions of this financial cooperation. The less observed aspect of this financial cooperation has been the new posture of the Chinese to deepen currency swaps and the establishment of offshore trading hubs. China’s economy passed that of the U.S. in 2017. Projections by economists from international financial institutions are that by the start of 2021 the Chinese economy will be more than 16 percent larger than that of the US, and by 2025 is projected to be almost 40 percent larger.

Increased Chinese trading and investment activities have implications for the Chinese currency. Where the US accounts for about 61.78 percent of allocated reserves in 2020, the Chinese currency accounted for only 2% of global foreign exchange reserve assets. As a centrally planned economy, the ability of the Chinese state to protect its people from the ravages of international finance is directly linked to the state dominated financial structures in China. Consequently, the renminbi’s (RMB)) role as an international payment currency will remain constrained as long as the centrally planned financial structures ensures the unwillingness to free up the capital account and to allow the currency’s value to be determined by market forces. The AIIB, BRICS Development Bank and the Belt and Road Initiative (BRI) were all initiatives to expand the role of the RMB without dismantling the state run system in China. These three initiatives AIIB, BRICS, BRI have buttressed other efforts which include trade settlement programs, RMB offshore clearing banks, off-shore RMB denominated bond market in Hong Kong, and a network of central bank RMB swap lines.

One ASEAN country that has become a clear beneficiary of the offshore trading hub has been Singapore. Singapore became a base for Chinese capitalists throughout the region whether they were from the Chinese mainland, Hong Kong or Taiwan. Singapore has steadily grown to become the third largest foreign exchange center after London and New York. As one of the principal offshore bases for the Chinese currency, the importance of Singapore as a global financial center will grow, especially in the wake of the departure of Britain from the European Union.

In 2013, when the Chinese political leadership were scouting around for offshore bases for the RMB, the City of London had been earmarked as one of the offshore hubs of the Chinese currency. Now in the era of Brexit, London will lose its importance to China and societies such as Singapore will be the beneficiary. As one analyst noted,

“If UK financial institutions lose EU passporting rights and RMB-denominated products can’t be sold cross-border in the EU without fresh approvals, will that have an impact on China’s willingness to continue to position the UK as its leading offshore international RMB financial center?”

The changes at the global level are having important repercussions for the US dollar as a result of Asian economic growth and the increasing importance of Asian currencies in global trade and investment. Arvind Subramanian and Martin Kessler had noted as far back as 2013 before the conclusion of RCEP that,

“In this region, 7 currencies out of 10 co-move more closely with the RMB than with the dollar, with the average value of the CMC relative to the RMB being about 60% greater than that for the dollar. We find that co-movements with a reference currency, especially for the RMB, are associated with trade integration. We draw some lessons for the prospects for the RMB bloc to move beyond Asia based on a comparison of the RMB’s situation today and that of the Japanese yen in the early 1990s. If trade were the sole driver, a more global RMB bloc could emerge by the mid-2030s but complementary reforms of the financial and external sector could considerably expedite the process.

And the magnitude of these co-movements is greatest for the RMB in 7 cases compared with 3 for the dollar (the average magnitude is 0.55 for the RMB and 0.34 for the dollar). It is now the case that the currencies of South Korea, Indonesia, Malaysia, the Philippines, Taiwan, Singapore, and Thailand, more closely track the RMB than the dollar. The dollar’s dominance as reference currency in East Asia is now limited to Hong Kong (by virtue of the peg), Vietnam and Mongolia.”[13]

The cogent point for the future of the US dollar in the ASEAN region is that, the convenience of single currency centered global trading and transaction system will give way to a more complex multi-currency system that, while still global in character, will be characterized by regional considerations.

The boast of John Connally in 1971 that ‘the dollar is our currency, but it’s your problem,’ has been taken seriously by the countries of Asia and those countries that have faced sanctions by the US Treasury. Sanctions against Russia, Iran, Venezuela, Turkey and dozens of states and individuals have forced these states to look for trading mechanism beyond the dollar as a vehicle currency. Prior to the weaponization of the ‘exorbitant privilege’ of the dollar the bulk of global trade invoicing and global commodity pricing was undertaken in dollars. Also, at present, the dollar is by far the most important vehicle currency in foreign exchange markets.

Since 2014 both Russia and China have invoiced their trade in oil and gas in local currencies and in barter deals. As of 2018, the Renminbi is now more common than sterling in oil future benchmarks, despite having no share in the market prior to 2018. At the same moment, trade invoicing in East and South East Asia, along with currency trading at the Shanghai and Hong Kong financial centers were based on the RMB. In the face of the Trump trade war against China, the leaders in Beijing have been quite ready to make Singapore the principal offshore base for the RMB while reining in the possibilities for the US finance capital to seize assets in Hong Kong.

The reality of Brexit, the RCEP, and the consolidation of the European bloc means that there is now a tripolar currency system. There is the dollar zone that will increasingly be limited to the North American region (along with the countries of the Oil Producing regions of West Asia). Then there is euro-zone, trade invoicing and currency trading in Frankfurt, Rotterdam and Paris. The third zone will be that of the biggest trading bloc in the world with both the RMB and the Japanese yen as the currencies of this region, setting the stage for a post dollar world.

US political economy and the post dollar world

The current New York and London centered global financial system has been negatively affected by the economic crisis of capitalism, the COVID -19 pandemic, Brexit and the determination of the countries of Asia to break from dollar hegemony. At the moment of the establishment of the AIIB, former Treasury Secretary Lawrence Summers declared its creation and ‘the failure of the US to persuade dozens of its traditional allies … to stay out of it’ marked ‘the moment the United States lost its role as the underwriter of the global economic system.’ [14]

If the 2007-9 economic crisis and the QE had marked the start of the post dollar world, the AIIB accelerated that process. Now the agreement for RCEP along with the EU/China “Comprehensive Agreement on Investment” will add another step in the move away from the dollar. The think tanks of ASIA and institutions such as the Asian Development Bank has been putting out position papers on the “Use of National Currencies for Trade Settlement in East Asia.”[15] Since 1971, the International Monetary Fund has acted as a prop for the US system. Calls for the reform of the IMF and for expanding the resources of this institution by the issuing of special drawing rights (SDRs) cannot gain any substance in the context of the weaponization of finance. Weaponization of finance is all about bringing into service financial instruments and tools in order to advance the Wall Street/Treasury/IMF revolving door.

It is now patently clear that the IMF and the World Bank cannot be reformed despite calls by central Bankers in the West for a boost for IMF resources. The European capitalists are bracing for a more determined struggle against the dollar after Brexit and in preparation for this battle, Christine Lagarde left her position as the Managing Director of the IMF to head up European Central Bank. Lagarde has brought her familiarity with the crypto currency efforts of North America to bolster the push by the European Union to establish a digital euro. In the face of the consolidation of trading and financial arrangements in Asia, the United States and the European Union are now locked in a struggle to dominate Russia, Turkey, Venezuela, Iran, Arabia and Africa. In one gambit to strengthen its relationship with Iran, in 2018, the EU established the Instrument in Support of Trade Exchanges (INSTEX) as a European special-purpose vehicle (SPV) to facilitate non-USD and non-SWIFT transactions with Iran to avoid breaking U.S. sanctions.

With the economic crisis deepening and the US planning more ‘stimulus’ packages, the acquiescence of the countries of the world to the US printing money will be limited. Moreover, the deployment of military forces to bully countries such as Iran and Venezuela have exposed the limits of the military management of the international system.

Acceleration of the post dollar world

RCEP has emerged out of the contractions of globalization, the weaponization of everything and the efforts by the ten members of the ASEAN countries to provide intellectual and political leadership to move the Asia Pacific region beyond the US–China dynamic. From the signing of the Bangkok Declaration in 1967 establishing ASEAN community, there was a clear understanding that the regional interest must be some part of the national interest. True neutrality meant taking positions based on your own interests, and not allowing others to define your interests for you. The basic approach that had been consistent was to manage relations between members so as to minimize the opportunity for external powers to take advantage of internal divisions to advance their interests at the expense of members of the community. The weaponization of trade and finance by the USA forced the speed of the agreement of RCEP.

Secondly, the trillions of dollars being rolled out for stimulus packages to save Wall Street has opened new possibilities for massive two-way capital flight between emerging economies and US capital markets with all of the attendant destabilizing consequences. The ASEAN states have decided that after the Asian financial crisis and the 2007-9 bailout of western financial hegemons, they will no longer accept the mantra of “play the cards they have been dealt as best they can”, incorporating potential international spillovers into their monetary policy decisions and reacting to global risks.

Barry Eichengreen in numerous articles on the survival of the pound through periods of crisis/great depression and the co-habitation of the pound and the dollar after 1913 has in many places noted that the dollar will be the dominant currency for the foreseeable future. What Barry Eichengreen and Benjamin Cohen missed from their analysis was the centrality of militarism in preserving currency domination.[16]

Of the US mainstream economists, it is Ken Rogoff who has been sounding the alarm at the profligacy of Wall Street, writing that “simply put, there is a fundamental inconsistency over the long run stability of the relative value of the dollar, while there is an ever-rising share of US debt in world markets and an ever-falling share of US output in the global economy.”[17]

In the words of the Mervyn King, former head of the Bank of England, “Another economic and financial crisis would be devastating to the legitimacy of a democratic market system…. By sticking to the new orthodoxy of monetary policy and pretending that we have made the banking system safe, we are sleepwalking towards that crisis.” [18]

It was under Donald Trump that the world actually understood the text of Michael Hudson on Finance as Warfare.

The Third component of this post dollar future is the hedging of the allies of the United States: Korea, Japan and Australia in their relationship to the RCEP and the future of the ASEAN region as an economic, financial, and innovation bloc. Vietnam and Indonesia had been cautious about the dominance of China in the region, but the collective position of the original ASEAN states that Regional Financial Safety Nets (such as the CMIM and AMRO in East Asia), Bilateral Safety Nets (swaps among central banks), and National Financial Safety Nets (reserve accumulation by countries) were superior forms of financial engagement to links with the US led IMF, Multilateral Financial Safety Net. Financial strategists in Singapore have also hedged in their relationship to the US dollar while playing a skillful game to replace London as the dominant base for the overseas market in the Chinese currency.

The fourth component of the post dollar world involves issues that are not central to Asia. Russia, Iran, Turkey, Cuba, Venezuela and all of Africa have a vested interest on the post dollar world. Calls for the cancellation of the Third World Debt have been amplified in the era of COVID-19 where countries such as India and South Africa have been calling for the World Trade Organization (WTO) to suspend intellectual property (IP) rights related to COVID-19 to ensure that not only the wealthiest countries will be able to access and afford the vaccines, medicines, and other new technologies needed to control the pandemic.[19] This proposal from India and South Africa to the WTO have far reaching consequences beyond health. Intellectual property also includes trade secrets, industrial designs and copyright protections. During the COVID-19 pandemic, treatment providers and governments have had to grapple with intellectual property barriers to essential equipment like masks, ventilator valves, crucial components of testing kits and other vital equipment that we’ve seen huge shortages of during peaks of the pandemic. At the same time real cooperation among all states of the world that could harness human knowledge to fight the pandemic has been hindered by the ideas of private property and capital accumulation by pharmaceuticals and the Wall Street barons.

The disastrous response to the pandemic in the USA and Britain, two of the centers of financial capital, has opened the eyes of billions around the world. The briefings of the WHO have warned that, “This pandemic has been very severe. It has affected every corner of this planet. But this is not necessarily the big one.”

COVID, climate change, economic depression and the need for the reconstruction of human lives are all converging to support the calls for the dismantling of the IMF and World Bank and for the establishment of new, sustainable financial system. From the period of the struggles against the Bretton Woods Institutions, progressive scholars have been calling for the dismantling of the Bank and the establishment of the International Bank for Reconstruction and Reparations (IBRR). Institutions for repairing the planet and repairing the centuries of imperial plunder can arise out of this crisis.

One major challenge for progressives in North America is whether they will form a pact of global solidarity with those who are struggling for a better world.


1. The ten ASEAN member states are :(Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam).

2. Walden Bello, “What Will a Biden Presidency Bring to the Asia Pacific?” Foreign Policy in Focus, November 18, 2020. The scholarship and writings of Jomo Kwame Sundaram have also been important contributions from Asia to the ideas of Bandung and the New International Economic Order.

3. Mark Carney, “The Growing Challenges for Monetary Policy in the current International Monetary and Financial System,” Speech delivered at the Jackson Hole Symposium 2019 ,23 August 2019, https://www.bankofengland.co.uk/-/media/boe/files/speech/2019/the-growing-challenges-for-monetary-policy-speech-by-mark-carney.pdf

4. Graham Allison, Destined for War : Can America and China Escape Thucydide’s Trap? Houghton Mifflin, New York, 2017

5. Peter Navarro, Death by China: Confronting the Dragon – A Global Call to Action, Pearson, FT Press, 2011

6. The eleven members of CPTPP are: Australia, Brunei Darussalam, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam.

7. Keith Bradsher and Ana Swanson,,”China-Led Trade Pact Is Signed, in Challenge to U.S.,” New York Times, November 15, 2029, https://www.nytimes.com/2020/11/15/business/china-trade-rcep.html

8. Tom Allard, “Vaccines, not spy planes: U.S. misfires in Southeast Asia,” Reuters, October 27, 2020, https://www.newsbreak.com/news/2090281151658/vaccines-not-spy-planes-us-misfires-in-southeast-asia

9. Vincent Bevins, The Jakarta method: Washington’s Anticommunist Crusade and the Mass Murder Program that Shaped Our World, Public Affairs. 2020

10. Matthew Goldstein, Goldman Sachs Is Said to Admit Mistakes in 1MDB Scandal, New York Times, October 20, 2020, https://www.nytimes.com/2020/10/20/business/goldman-sachs-1mdb-malaysia.html

12. James Felkerson, “$29,000,000,000,000: A Detailed Look at the Fed’s Bailout by Funding Facility and Recipient,” Levy Economics Institute, Working Paper No. 698, December 2011, http://www.levyinstitute.org/pubs/wp_698.pdf

13. Fitch Solutions country Industry Reports, “Industries Will Lead The 5G Revolution,” October 2020. See also Kania, Elsa B. “Securing our 5G future,” Center for a New American Security Reports; Washington, (Nov 7, 2019)

14. Subramanian, Arvind; Kessler, Martin,“The Renminbi Bloc is Here: Asia Down Rest of the World to Go,” Journal of Globalization and Development; Berlin Vol. 4, Iss. 1, (2013): 49-94

15. Larry Summers, “Time US leadership woke up to new economic era,” Larry Summers Blog, April 4,2015, http://larrysummers.com/2015/04/05/time-us-leadership-woke-up-to-new-economic-era/

16. Lee, I. H., and Y. C. Park. 2014.” Use of National Currencies for Trade Settlement in East Asia: A Proposal. ADBI Working Paper 474. Tokyo: Asian Development Bank Institute. Available: http://www.adbi.org/working-paper/2014/04/11/6230.currencies.trade.east.asia/

17. Eichengreen, Barry. 2005. ‘‘Sterling’s Past, Dollar’s Future: Historical Perspectives on Reserve Currency Competition.’’ NBER Working Paper No. 11336. Cambridge, MA: National Bureau of Economic Research. See also Eichengreen, B, Mehl, A, and Chiţu, L (2018), ‘How Global Currencies Work: Past, Present, and Future’, Princeton University Press.

18. Ken Rogoff, The Calm Before the Exchange-Rate Storm? Project Syndicate, November 12, 2020

19. Larry Elliot, “World economy is sleepwalking into a new financial crisis”, Guardian, October 20, 2019

20. Ann Danaiya Usher,” South Africa and India push for COVID-19 patents ban,” Lancet, December 5 2020, https://www.thelancet.com/journals/lancet/article/PIIS0140-6736(20)32581-2/fulltext


Horace Campbell is Professor of African American Studies and Political Science, Syracuse University. He is the author of Global NATO and the Catastrophic Failure in Libya, Monthly Review Press, 2013.  Notes.