China 's economy is the second largest on the globe but its currency has no international acceptance. Can this affect it in catching up with the US?

According to economistsview , China has become a systematically important economy in the world, accounting for about one-sixth of the global economy. It is, therefore, of no surprise that a slowdown of Chinese economic activity impacts many economies globally, including the U.S. Reliably quantifying these effects is very challenging. Most notably, data quality and availability and changing relationships between economies over time complicate efforts. There are also some technical (but nevertheless important) problems arising from modeling the global economy that features many interdependent individual economies. Using an econometric technique that examines interdependence of individual economies in the global economy, the Chinese slowdown and its impact on U.S. output growth can be assessed, as well as changes in the relationship since 2000. Thus, it appears that the impact of slowdown in China on the U.S. economy has increased over time—at the turn of the century, slower growth in China would have had a small effect on the U.S. Today, reducing Chinese output growth by  percentage point shaves about 0.2 percentage points from U.S. output growth. However, the real reasons to worry about china is the world's largest currency union contains about 1.7 billion people and accounts for more than a third of global economic output. It also may be headed for a breakup... I’m talking, of course, about the U.S. and China. For more than 20 years, China has kept the yuan's value against the dollar in a very tight range. ...  Over the past couple decades, China has been able to offset the effects of Fed policy by varying its relatively large level of public investment. It has always been clear, though, that China would no longer want to use fiscal policy in this way once its economy was sufficiently developed. The country's currency moves over the past few months suggest that it might have reached this point. ... Any such breakup presents a big problem: Many businesses and financial institutions have entered into contracts that make sense only under the premise that the exchange rate is not going to vary much over time.... As far as I can tell, U.S. economic policymakers aren’t putting much emphasis on the potential repercussions of a break-up of the China-US currency union. ... There's a significant risk that if the Fed keeps tightening in 2016, it could force an abrupt break-up. The resultant disorder in the world economy would not serve Americans well.

In the next 20-30 years maybe yes but currently there is no chance for Yuan to be the main currency. US dollar presents not only the strenght of the economy (heavily indebted but still strong) but primarily transparency of the monetary policy.

If you use these criteria the Chinese economy and currency don't fulfill requirements. There are too much political interference in the economy (in the industry, financial market, etc.) and too little independence of People's Bank of China which mainly realizes the government policy.

There is also another issue, it is easier to control your currency if you can buy/sell US debt (most important variable in equation). You can exert economic pressure on US, keep them in check specially when you negotiate new trade deals with US. Artificial control of the USD/CNY is one of the success factors of chinese exporters.

I agree with experts opnions , all have discuss many aspects and they have impacts , infact China  still concentrating on Growth and even Yuan is lower then dollar but stronger economy , while  dollar is strong curreny but  economy is not tht much strong .

The Chinese have a government controlled currency and a large portion of the economy is made of state industries. Many of the others are state subsidized

Did they really get to  no. 2?

Thier statistics are in question?

All those are holding them back.

 

 

The simple answer to China not allowing free flow of currency and capital into has a significant impact to their economy.

 

Foreign Direct investment while adding in dollar for dollar into GDP, there is a significant impact more to that because of what is called the acceleration of money.  A new plant is open, and workers are hired, more workers have disposable income.  They then go to stores and spend their money at the stores.  The local store owner who now has more cash, will invest and spend more in the local economy etc.

 

Without going into a dissertation, much of China’s data is suspect or that the growth was in building inventory of products that since in inventory including vacant cities. 

 

Without access to foreign currencies plus limiting access of foreign money, China may be in for more of a rocky current future which in fact could lead not only to a GDP pull back, but maybe into a destabilizing situation.

 

Chinese Reminbi / Yuan is also used as a medium of payment in the Far East. I am of the opinion that the US Dollar do not have "real" value as it does not really have gold to back its currency. 

The moment countries in Middle East unpegs its currency to the US Dollars, we will see that US Dollars will decline its values and demand.

In reality, the Chinese economy has overtaken the US economy. However China prefers to stay at number 2 for geo political reasons. I stand corrected.

 

China's economy is the second largest on the globe but its currency has no international acceptance because: The simple answer to China not allowing free flow of currency and capital into has a significant impact to their economy.

In addition to that In reality, the Chinese economy has overtaken the US economy. However China prefers to stay at number 2 for geo political reasons. I stand corrected.