Zhou Li, the former deputy minister of the Central Liaison Department and a senior researcher at the Chongyang Institute of Finance at the People’s University of China, recently stated in the Chinese Social Science News that he is actively working on the six major preparations for the “deterioration of the external environment”.
Zhou Li said in an article titled “Six Active Preparations to Respond to the Deterioration of the External Environment” that China’s pandemic prevention and control have achieved desired results at the current stage but still face ongoing and increasing pressure to prevent imported infections. The resumption of production and economic and social development are facing new difficulties and challenges.
He believes that it is necessary
- to prepare for the deterioration of Sino-US relations and the full escalation of the conflict;
- to prepare for the shrinking of external demand and the disruption of the industrial chain and the supply chain;
- to accept the coronavirus as a new norm and prepare for long-term coexistence with the virus;
- to get rid of the US dollar hegemony and gradually implement the decoupling of the RMB and the US dollar;
- to prepare for the outbreak of a global food crisis;
- to prepare for the resurgence of international counter-terrorism forces.
According to public information, Zhou Li was born in June 1955 and is a professional diplomat. He served as the deputy minister of the Central Liaison Department from May 2013 to July 2016.
Relations with the United States
In the article, when talking about relations with the United States, Zhou Li said, “In the six months since the viral outbreak, the US ruling authorities (including the Trump administration and the US Congress) have continued to strengthen their pressure on us, such as
- comprehensive restrictions on the personnel exchanges between the two countries;
- cancel WTO’s preferential treatment as developing countries for China and Hong Kong;
- add new criminal charges against Huawei and its subsidiaries;
- define five Chinese media as ‘foreign missions’;
- sign the ‘Taipei Act’;
- deploy warships to the Taiwan Straits and the South China Sea to provoke China
- stigmatized the new coronavirus as a “Chinese virus” and tried to write it into a Security Council resolution;
- claimed to seize the U.S. Treasury bonds purchased by China as collateral for victim compensation after the pandemic;
- the White House issued a China’s strategic policy;
- the so-called ‘2020 Uyghur Human Rights Policy Act’ was signed into law; etc, etc.”
He wrote, “It is certain that there will be more actions to be taken one after another. We must have a clear understanding of the ‘decoupling‘ that will eventually be inevitable.” He continued. “We must not underestimate nor fear the comprehensive suppression by the US ruling authorities expanding multiple areas or their fight-till-the-end mentality, policy, and style.
“The difficulties and challenges we face will be unprecedentedly complex and severe.” He emphasized, “At present, it is especially necessary to guard against the risk of the US pursuing damage claims against us.”
In terms of economy, he said: “We must be prepared to cope with shrinking external demand and the disruption of industrial and supply chains.”
Zhou Li said, “The International Monetary Fund and many other international economic organizations have issued reports many times since the beginning of this year, changing the outlook of global economic growth from -3% to -4.9% this year, the worst economic contraction since the Great Depression in the 1930s.
The pandemic is sweeping across the world, and most countries have to take measures such as ‘halting flights’,’city lockdown’, and ‘economic shutdown’, resulting in a sharp decline in the demand for various intermediate products and consumer products in the world’s major economies.”
He said, “The orders of our foreign trade export enterprises have been greatly reduced. The production of upstream and downstream enterprises has stalled, and international transport logistics have been blocked. The phenomenon of unavailability of raw materials and the unavailability of products has surged, which has put tremendous pressure on our steady-growth and stable-employment.
“We will actively adapt to the adjustment of the global industrial chain and supply chain according to the deployment of the central government and the changes in the global pandemic situation, and work hard in the aspects of securing, supplementing and strengthening chains. Every effort should be made to accelerate the domestic development layout. Determined to build a regional China-centered industrial chain, promote more infrastructure projects to be implemented in China, and gradually form a new development pattern with two cycles:
- the domestic cycle as the main one and
- the domestic-and-international dual cycles
to ultimately promote China’s new advantages in international cooperation and competition in a new situation.”
Regarding the hegemonic status of the US dollar
Zhou Li believes that “the United States will rely on the international monopoly of the US dollar in the financial field, and will pose more and more threats to our future developments.”
He analyzed and pointed out that there are two problems:
- First, the value of US dollar assets will shrink greatly when the US Federal Reserve carries out quantitative easing policies or even releases money without a bottom line. For our various financial institutions, companies, enterprises, and individuals using US dollars for international businesses or banking, their dollar assets are in danger of being increasingly diluted and drained.
- Second, under the premise that the United States controls the main channel for international payment and clearance, namely the Global Interbank Financial Telecommunications Association (SWIFT), the United States continues to impose economic sanctions on Russia, Iran, and countries with energy cooperation with China, making them obliged to withstand the “long-arm jurisdiction“. The path of international settlement is severely blocked, and the transactions become very difficult.”
He said, “Both indicate that the US dollar may become a major risk issue for choking China. We must
- accelerate the pace of RMB internationalization, and
- accelerate the promotion of a larger and larger scale of cross-border RMB payments and RMB clearing arrangements.
- Establish a local currency settlement mechanism with more countries, and
- create conditions to apply it to the operation of the global industrial chain and supply chain to the greatest extent possible.”
In addition, Zhou Li also emphasized that due to factors such as the pandemic, the locust plague in East Africa and the Middle East, and the drought in the United States, major food-producing countries are facing a dilemma of poor harvests. It is expected that global food production will be reduced by 30% this year. He believes that it is also necessary to prepare for a global food crisis.