China's Xi Jinping may be looking at a chilly trip to the Swiss Alps this week, and I don't mean the weather.
The most interesting thing about Xi being the first Chinese leader to join the World Economic Forum is geopolitical timing. This year's Davos confab overlaps with the Jan. 20 swearing-in ceremony of Donald Trump, who made withdrawal from global elites a hallmark of his presidential campaign. Trump's "America first" tariffs, walls and unilateralism would seem to make China de facto champion of globalization. Xi's Davos jaunt will punctuate that point, one presaged in currency markets in the closing days of 2016.
Quietly, but importantly, Beijing downgraded the dollar's role in its trade-weighted foreign exchange basket by four percentage points to 22.4 percent, while boosting the role of the South Korean won and Singapore dollar. The change signaled two things. One, the yuan has room to weaken. Two, the dollar's days are numbered as the linchpin of world trade. Hardly the turn of events Trump's team hoped for as it threatens a trade war.