The Business Times from Malaysia reports - “LI YONG, China’s vice minister for finance, said he had heard a ‘rumour’ that the US dollar was headed for a 25 per cent drop. If the gossip was true, the consequences would be ’shocking’, he said.”

The United States has been pushing China to unpeg its currency from the US dollar. The reasoning is that China’s currency will rise in value and help eliminate the US trade deficit. I question if the United States truely wants to increase China’s buying power, especially considering the rising price of oil.

At the end of the day, China may just leave the US dollar on its own accord. As the article reports, there is increasing discussion about creating a regional currency to replace the US dollar. This could help bring regional economic unification. For the US though, it could mean that China would become less dependant on our goodwill. China may be able to act more independently both economically and in international situations such as what we have with Iran today. If you believe in the Kondratieff cycle you see where this could be going.