By Dr. Saman Shali

The question of whether the economy or the military controls the world is complex and depends on various factors, including historical context, geopolitical dynamics, and societal norms.

The economy and the military play significant roles in shaping global power dynamics. Economic power refers to the ability of countries or entities to generate wealth, create jobs, influence trade and investment, and control resources. Military power, on the other hand, refers to the ability to project force, deter aggression, and defend national interests through the use of armed forces.

In contemporary times, the global economy has become highly interconnected, with countries relying on international trade, finance, and investment for economic growth and development. Economic power, therefore, plays a crucial role in shaping global affairs, as countries and corporations compete for access to markets, resources, and technology.

At the same time, military power remains a significant factor in global politics. Military capabilities, including nuclear weapons, advanced technologies, and strategic military alliances, can shape the balance of power among nations and influence geopolitical outcomes. Military interventions, conflicts, and the use of force continue to impact world events and have far-reaching consequences.

It’s important to note that the relationship between the economy and the military is complex and interrelated. Economic strength can enable the development of military capabilities, while military power can also impact economic stability and security. The two are not mutually exclusive and often intersect in global affairs.

While both the economy and the military play significant roles in shaping the world, their influence is multifaceted and interrelated. The relative importance of economy versus military power in global affairs can vary depending on the context and dynamics of specific situations.

Today, the world is in an economic and military confrontation between the two great powers of the United States and China, leading to the conflict between the US dollar and the Chinese Yuan. Can the Chinese Yuan break the US Dollar when it comes to global crude oil trading?

                                    Chinese yuan: Currency hits record lows against US dollar (Source: BBC)

 The U.S. dollar and the Chinese Yuan, also known as the renminbi (RMB), are two major currencies that play important roles in the global economy. Here’s how they impact the world economy:

1. U.S. Dollar (USD): The U.S. dollar is the world’s primary reserve currency, meaning it is held in significant quantities by central banks and governments around the world to facilitate international trade and transactions. The U.S. dollar is also the dominant currency used in global financial markets, including for commodities such as oil and gold, and it is widely accepted in global transactions.

The U.S. dollar’s status as the world’s reserve currency gives the United States significant economic advantages, including the ability to issue debt in its own currency, lower borrowing costs, and influence global economic policies. The U.S. Federal Reserve, the country’s central bank, also plays a crucial role in global monetary policy as its actions can impact global financial markets and have spillover effects on other economies.

2. Chinese Yuan (CNY/RMB): The Chinese Yuan, also known as the renminbi (RMB), has been rising in prominence in the world economy. China is the world’s second-largest economy and a major player in global trade and investment. As a result, the internationalization of the Chinese Yuan has been a strategic objective for China to reduce its reliance on the U.S. dollar and enhance its global economic influence.

In recent years, China has taken steps to promote the use of the Yuan in international trade and investment, expanding its network of currency swap agreements with other countries, and launching initiatives such as the China Belt and New Roads Initiative, which aims to boost trade and investment along China’s economic corridors.

The growing internationalization of the Yuan has the potential to impact the world economy in several ways, including promoting trade and investment between China and other countries, increasing the Yuan’s role as a global reserve currency, and potentially challenging the dominance of the U.S. dollar in certain regions or industries.

It’s important to note that the U.S. dollar and the Chinese Yuan are not the only currencies influencing the world economy. Major currencies such as the Euro, Japanese Yen, and British Pound also play significant roles in global finance and trade. The global economy is complex and multi-faceted, with various currencies and economic factors shaping its dynamics.

There is talk of a new global currency coming. The BRICS alliance is exploring innovative currency ideas and plans to exchange proposals at its upcoming summit in South Africa on August 15, 2023. BRICS is an acronym for five major emerging economies: Brazil, Russia, India, China, and South Africa. This new currency is backed by gold as opposed to the US dollar which is only backed by the strong US economy. The new currency will pose the biggest challenge for the US dollar since the euro currency was introduced on January 1, 1999.

But the recent war between Russia and Ukraine has aggravated this conflict between the world’s two most powerful nations over economic and military superiority, and between them and the countries they represent. This would lead to a real conflict between these two poles.

In summary, it is important to know that the United States and China are the two most powerful countries in the world, with advanced military capabilities and global economic influence. Conflicts between the two countries can have serious consequences, not only for the two countries but for the whole world.

Rather than focusing on the possibility of war, it would be more productive to foster cooperation and communication between the United States and China and deal with all issues and conflicts peacefully. Diplomacy, negotiations, and constructive dialogue are essential to maintaining the stability and security of the international community.

Saman Shali has a Ph.D. in Science (1981) from the University of Sussex. Dr. Shali worked as an Assistant Researcher and Assistant Professor at the University of Sussex, King Saud University, and Pennsylvania State University. He is also a senior fellow at the Mediterranean Institute for Regional Studies- MIRS.