The View | China: Predator or the Great Reflator?

In 2009, the People’s Bank of China governor Zhou Xiaochuan published an essay arguing that the US dollar was no longer working as the world’s reserve currency. “You’re fired!,” is the way Donald Trump would have put it.

Zhou was writing at a time when the dollar-dependent trade financing system was still recovering from the shockwaves caused by the Lehman Brothers bankruptcy in 2008. That event led global banks to call in their trade financing and brutally cut off liquidity to producers in countries like Korea or China. Goods were stuck at the factory door, or in some cases unloaded from cargo ships and dumped at ports.

Moreover, it has the right temperament to intermediate global savings because of its expansionary tendencies, as evidenced by its perpetual trade deficits.

But now it is 2016, and US monetary policy looks almost conservative, compared with other major countries or blocs. Is this appropriate in light of tepid global growth? Andrew Sheng, former head of the Hong Kong Securities and Futures Commission, says the answer is no. He is trying to revive the idea that dollar should be fired as the world’s reserve currency.

Sheng, a prolific commentator on global financial issues, compared the strong dollar — caused by the gradual normalisation of US monetary policy — to the straitjacket produced by the gold standard during the Great Depression.

“In a zero-interest-rate world, a strong dollar plays the same deflationary role in global markets as the gold standard did during the 1930s,” Sheng said last week in an article co-written with University of Hong Kong professor Xiao Geng,