Military Review

How China will "deal" with the dollar: will they sell oil for yuan?

28
China is the most important political and economic competitor of the United States. Many events in world politics and economics are somehow connected with the poorly concealed confrontation between the two great powers. One of the key challenges facing China is to weaken the dollar, which will help to undermine the economic power of the United States. Already this year, the PRC can take a serious step, directed precisely against the dollar.


As is known, China is the world's largest oil importer. Historically, China has the largest population in the world, an impressive territory, and natural diversity from deserts to high mountains, from taiga to the tropical jungle. But China is deprived of oil resources. This creates big problems for the country. Therefore, it is not surprising that preparations are currently underway to begin trading oil futures on the Shanghai Stock Exchange. If this happens, the real revolution in the global economy will result. First about what futures are. This is, strictly speaking, exchange contracts for the sale of the underlying asset. By concluding such a contract, the buyer and the seller agree on the price level and delivery time.



During the second half of the twentieth century, a monopoly of the American currency was formed on the world market. Payments for oil were made in dollars, which contributed to the preservation of the economic hegemony of the United States. This position of the US currency was achieved largely due to the efforts of US leaders who managed to convince most of the oil-exporting countries of the need to sell their strategically important resource only for dollars. In return, the oil monarchies of the Persian Gulf received American political and military support, which was especially valuable during the Cold War (recall that the whole Arab world was shaken by revolutionary events, pro-Soviet forces came to power in South Yemen, bordering Saudi Arabia and Oman, were active radical left and communist organizations in other countries of the Arabian Peninsula).

Everyone knows that in Saudi Arabia, Qatar, Bahrain, the United Arab Emirates political regimes are much more “tough” in their rigidity than the same Assad regime in Syria or the Mubarak regimes in Egypt or Gaddafi in Libya that have already ceased to exist. But neither the United States, nor the United Kingdom, nor other Western countries have ever seriously puzzled about the observance of human rights in the oil monarchies, did not impose economic sanctions against them, did not support the opposition in these countries. Arab sheikhs remain “handshaking” and are fully supported by the Western elite, from the British aristocracy to the American financial magnates. This is the payment for the loyalty of the oil monarchies to the American dollar as a universal means of payment for oil.

Up to now, oil trading is carried out only on three exchanges - the New York Mercantile Exchange, the London Oil Exchange and the Dubai Mercantile Exchange. All of them are controlled by the same circles of the global financial oligarchy. The owners of the exchanges firmly hold on to the ability to manipulate oil prices in any mode. The setting of oil prices is a powerful tool in world politics. A significant part of modern military-political conflicts is connected precisely with oil prices and with attempts of some countries to go against the established organization of exchange trade in oil. For example, sanctions against Iran in 2005 were introduced by the UN Security Council not because of the specificity of Tehran’s political course (this is only a formal justification for sanctions for the near man in the street), but precisely because Iran tried to create its own oil exchange and exit, thus, from the vicious circle of dependence on the global financial oligarchy with centers in the United States and Great Britain.

The notorious “global community” responded instantly and imposed economic sanctions against Tehran, banning all other states from buying Iranian oil. Iran began to look for workarounds and, in the end, was able to do without the US dollar, supplying its oil for the national currencies of the partner countries, or for its equivalent in gold. In the case of China, we will be able to observe even more interesting developments. Nevertheless, the scale of China and Iran as states and players in the world political and economic arena is quite different.

China’s desire to abandon the use of the dollar in its “oil” calculations is not due to the consequences of sanctions, as in the case of Iran, but with the growth of Beijing’s economic ambitions. China sees itself as the leader of world politics and economics, and for this it is necessary to deliver a massive blow to the dollar. Back in 2015, the Chinese yuan gained the status of a global reserve currency. Of course, to a greater degree this is the political move of the IMF, since no real increase in the share of the yuan in the reserves of world banks followed this decision. Although some countries began to make transactions in yuan, while the Chinese currency, of course, still can not be compared with the US and even with the European.

But even this promotion of the Chinese currency says a lot. And Beijing, of course, is not going to stop there and is eager to further strengthen its position in the global foreign exchange market. Already, the Chinese stock market, as well as the raw materials market, are the largest among the markets of all the developing countries of the world. They have long caught up with the British and Japanese markets. The turnover of futures trading on China's stock exchanges last year amounted to 25,5 trillion dollars.

How China will "deal" with the dollar: will they sell oil for yuan?


One of the most important tasks set by the Chinese leadership is to increase the number of countries in the world that make settlements with China and Hong Kong in RMB. This will strengthen the position of the yuan as an international currency. And it is for this purpose that China decided to start trading oil futures at the exchange. Prior to this, in April 2016 of the year, started trading in gold futures, denominated in RMB. At first, trading in gold futures began on the Shanghai Stock Exchange, and in July 2017, the Hong Kong Stock Exchange followed Shanghai. It is noteworthy that if it is impossible to buy gold on the New York and London stock exchanges, only gold futures are sold, then gold itself is represented on the Chinese exchanges. It is real, and that makes Chinese exchanges much more interesting.

Strictly speaking, to achieve this goal - to ensure the physical presence of gold on their exchanges - China has been going a long time, engaging in buying up gold on a huge scale throughout the world. Now the real reserves of gold in China are much more than in the USA, not to mention the leading countries of Europe. So, if in Germany gold reserves amount to approximately 3400 tons of gold, in the USA - 8000 tons of gold, in China - 20 000 tons of gold. As we understand, the difference is significant. Now oil futures will also appear on the PRC exchanges. In September, 2017, the Chinese mass media reported that trading in futures for crude oil would open on the Shanghai International Energy Exchange to foreign companies. This has become, although expected, in any case sensational. news.

What consequences may this decision of China entail for the global economy? So far, of course, it’s premature to talk about the consequences, but still some predictions can be made.

Firstly, as a result of the renminbi entering the oil market, the investment attractiveness of the US dollar will decrease. In the world market will appear currency (yuan), secured with real gold. Chinese partners will be able to buy real gold at Yuan at prices of Chinese exchanges. The dollar will be dealt a serious blow. First of all, it will feel the American economy. American banks can increase interest rates. It will become more difficult to get a loan, which will inevitably affect the American business of all levels. Entrepreneurs will have to work more actively with investors, while reducing consumer spending.



Secondly, the change in the layouts in the oil market may have a positive impact on oil prices. The cost of a barrel of oil is likely to increase, with some experts calling the figure in 70 dollars. Oil can be bought in RMB. The rise in oil prices will inevitably entail a rise in gold prices. At the same time, the purchase of gold will be simplified. After all, if an oil supplier sells oil for Yuan under a long-term contract, he will be able to acquire gold futures in parallel with the conclusion of a contract for the sale of oil on the Shanghai and Hong Kong exchanges. This, in turn, will provide the yuan with gold and significantly improve its position in the international market, attracting the attention of world business to it.

Third, strengthening the position of the yuan against the background of a weaker dollar will lead to the fact that over the next decade, the yuan will force out the dollar in other areas of world trade. Following the gold and oil will come the turn of other raw materials. China has now reached a level of development where it can already dictate terms to oil sellers. For example, Saudi Arabia has recently been asked to switch to China's settlement of accounts with China. Although the reaction of Riyadh is still unknown, it can be assumed that the Saudis were in a very difficult situation.

On the one hand, China is one of the most important buyers of Saudi oil. China needs oil in large quantities, it is not a small European "Belgium" or "Austria". To lose such a buyer would be very bad for Saudi Arabia. But on the other hand, to agree with the proposal of China means to anger the American patrons, who actually support the oil monarchies because they remain loyal to the dollar. Given that China has begun to reduce the volume of oil imports from Saudi Arabia, one can guess either Riyadh’s refusal of the Chinese proposal, or Beijing’s desire to “show the fuck’s mother” - how it will be if they don’t want to accept the PRC’s proposals.

Win countries where there are certain problems in relations with the United States and American satellites, which the media like to call "the world community." They will be able to avoid payments for oil sold in US currency. The Chinese decision will interest such countries as Iran or Venezuela, and quite possibly the same Qatar, which is now going through a difficult period in relations with the United States. Are the events taking place profitable for Russia? Of course, given the complicated relations with the United States, a weaker dollar can bring Russia considerable dividends. Moreover, Russia also needs buyers of Russian raw materials, and China is a huge market, which, given current trends in economic development, will only grow and strengthen over the years. Russia will be able to sell oil to China, while immediately exchanging the resulting yuan for gold. Thus, the gold reserve of Russia will grow, the country's dependence on the American currency will decrease.

To confront the Chinese economy, the United States is unlikely to be able, at least in the long run. After all, the main basis of the economic and political power of the United States is, until recently, the monopoly position of the dollar in the world market. If the dollar loses its position, then for the United States it will be a fatal blow. The "printing press" will no longer be able to ensure the economic prosperity and political hegemony of the American state.



The Chinese economy is already more powerful and dynamic than the American one. If the yuan turns into an international currency, the further growth of the Chinese economy will be even more rapid. What remains for the United States? Washington is clearly not satisfied with the current situation, so we should expect further attempts of political destabilization in different regions of the world, organized by the United States. The goal of Washington, in fact, is the same - to extend the existing status of the American power for a while. However move stories stop fail. In the twentieth century, the former "world hegemon" - the British Empire - lost its power and was pushed aside by the United States, and then the Soviet Union, and the PRC. In the foreseeable future, the USA expects the same scenario.

The weakening of the dollar may become a necessary “breath of life-giving moisture” for many national economies, which today are experiencing big problems precisely because of dollar hegemony. Developing countries, which have great economic potential, will also win, but the United States tried to hold back the development of the entire second half of the 20th and early 21st centuries.
Author:
Photos used:
http://news.xinhuanet.com, https://www.yahoo.com/
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  1. seti
    seti 14 November 2017 16: 04 New
    +3
    As long as China depends on sea routes controlled by impudent Saxons, it is unlikely that it will make significant purchases of oil for the yuan. But everything can change with the launch of the Siberian Forces and the NSR at full capacity.
    1. stalkerwalker
      stalkerwalker 14 November 2017 16: 13 New
      +3
      Quote: seti
      But everything can change with the launch of the Siberian Forces and the NSR at full capacity.

      These are regional projects that have a negligible impact on the global economy.
      My personal opinion is that China will “tear itself up” if it sits down to play at the same table with cheaters who change the rules during the game.
      1. DanSabaka
        DanSabaka 15 November 2017 06: 58 New
        0
        Of course, sharplers ... and with rich experience ...
        Persian Gulf oil monarchies received American political and military support, which was especially valuable during the Cold War (recall that then the entire Arab world was shaken by revolutionary events, the pro-Soviet forces came to power in South Yemen, bordering Saudi Arabia and Oman, left-wing radicals were active and communist organizations in other countries of the Arabian Peninsula).

        do not anyone really guess who, first of all, were these Arabian revolutions profitable?
        I hope that in the leadership of the PRC there are not blind people ....
    2. svp67
      svp67 14 November 2017 16: 16 New
      +2
      Quote: seti
      But everything can change with the launch of the Siberian Forces and the NSR at full capacity.

      And how? The Power of Siberia is a gas pipeline; oil is not flowing through it. The main suppliers of oil to China are the countries of the Middle East, Iran, Venezuela ... And the more the USA presses on the last countries, the faster they will abandon the dollar and transfer to yuan.
      1. seti
        seti 14 November 2017 16: 31 New
        +2
        I to the course .. Natural gas is inseparable from oil like flies from a horse. And its price is dependent on oil quotes. Gas is as important to China as oil.
        But I do not agree that
        Quote: svp67
        the more the USA presses on the last countries, the faster they will abandon the dollar and move to the yuan.

        If the United States decides to attack Venezuela in response to the sale of oil over the yuan, who will help it? Yes, no one. Russia and China are likely to confine themselves to protests at the UN. And others do not even scratch themselves, but think about whether it is worth it. The example of Gaddafi, Hussein is unfortunately contagious.
        Another thing is if someone “subscribes” to the same Iran or Venezuela. China as always in the chill and Russian Vanya hot coals? I'm against.
        If I’m not mistaken, Venezuela is selling the lion's share of its oil in the USA. So no invasion is needed - just stop buying oil and put Maduro to the bottom.
      2. max702
        max702 14 November 2017 23: 15 New
        0
        Quote: svp67
        And how? The Power of Siberia is a gas pipeline; oil is not flowing through it.

        The oil pipeline has long been built by ESPO .. Oil has been steadily going to China for three years now ..
      3. mac789
        mac789 15 November 2017 16: 28 New
        0
        But didn't ESPO start working? So China will have no problems with oil.
      4. Ren
        Ren 20 November 2017 05: 41 New
        0
        Quote: svp67
        The Power of Siberia is a gas pipeline; oil is not flowing through it.

        For the most part, the Power of Siberia is being built along the existing ESPO route, with the diversion from ESPO to China up to 20 million tons of oil per year. hi
  2. seti
    seti 14 November 2017 16: 20 New
    +2
    Quote: stalkerwalker
    Quote: seti
    But everything can change with the launch of the Siberian Forces and the NSR at full capacity.

    These are regional projects that have a negligible impact on the global economy.


    You are very mistaken. Look at the statistics of how much oil China is buying and from whom it is currently buying it. It turns out that a little less than half he buys just from the Russian Federation. And before, I bought the bulk from Saudi Arabia. The latter is already losing the sales market in the USA, and this used to be the main buyer.
    The same applies to natural gas. The share of the Russian Federation is growing and the share of Qatar is decreasing.
    1. stalkerwalker
      stalkerwalker 14 November 2017 16: 51 New
      +3
      Quote: seti
      You are very wrong

      You greatly exaggerate the capabilities of the Force of Siberia and the NSR.
      1. gladcu2
        gladcu2 14 November 2017 19: 09 New
        +3
        With whose power is this Siberia ...

        Here is the agreement between China and Russia on the stability of oil prices.
        Russia buys oil from Venezuela, with Chinese money.
        Why the Chinese do not buy directly from Venezuela. Because the contract. China needs a stable price for energy. They, as producers, do not like price hikes in the markets. They need stability and planning. Russia pledged to maintain stability in oil prices. This is an international cooperation.

        No one wants to feed speculators.
  3. Sige
    Sige 14 November 2017 16: 28 New
    +3
    Only sovereign countries can conduct foreign trade in their national currency. Colonies are required to trade in the currency that they indicate.
    1. Antianglosax
      Antianglosax 14 November 2017 18: 32 New
      +2
      Quote: Sige
      Only sovereign countries can conduct foreign trade in their national currency. Colonies are required to trade in the currency that they indicate.

      Therefore, we are a colony. I am surprised at the complete failure and incapacity of our authorities. Who is stopping them from promoting the St. Petersburg Exchange? EVERYTHING for this is available, except desire and will. As the producers of oil and gas (and gold), God himself ordered us to launch and promote a stock exchange trading for rubles to the fullest. But while our thieves' authorities are swinging, China is ALREADY working and catching up with it after some time will be unrealistic, the engine will leave. Is this stupidity or betrayal ?! Ugh ...
      1. mac789
        mac789 15 November 2017 16: 38 New
        0
        Petersburg exchange ... laughing when the Moscow and St. Petersburg exchanges (pancake workers) are working, the Chinese, Koreans, Japanese and other Australians are sleeping !!! The exchange was supposed to appear in Vladik 20 years ago. This damn not Merkushatam stadium to build however ... laughing
    2. antivirus
      antivirus 14 November 2017 20: 00 New
      0
      to the question of sovereignty --- a direct link between oil and gold WHO THOUGHT? - ONLY THE AUTHOR OF THE ARTICLE?
      "Russia will be able to sell oil to China, while immediately exchanging the yuan for gold."
      and who will pay for shoes and cars + high-speed trains (and the Moscow-Kazan-Ekater construction site itself)?
      1. gladcu2
        gladcu2 14 November 2017 21: 01 New
        +2
        Equivalent to value - gold was invented even before the First World War.

        Then, I.V. Stalin tried to introduce this equivalent. before the second world war.

        The whole problem is that the market is a huge parasitic organism. Equivalent to price, gold creates stability, which means that speculation is cut off. This kills the profits of speculators and banks.

        Banks are investing in speculation. For banks, a high bank percentage is similar to death. No one will buy their product. And it also kills speculation.
  4. thinker
    thinker 14 November 2017 16: 36 New
    +1
    Now the real gold reserves in China are 20 tons of gold.

    With one clarification -
    Most of these reserves are held by the population - 16,193 tons.

    http://goldenfront.ru/articles/view/ocenochnyj-ra
    zmer-kitajskih-zolotyh-rezervov-perevalil-za-2000
    0-t /
  5. Zark
    Zark 14 November 2017 16: 46 New
    +2
    I don’t understand what: where did the author get data on China’s gold reserve of 20000 tons?
    In the top 10 countries in terms of gold reserves, it is in 5th place with 1800 tons, and 1 in with 8000 tons as described in the article ..
    http://goldomania.ru/menu_002_010.html
  6. vasilkovichi
    vasilkovichi 14 November 2017 17: 30 New
    +2
    China will be able to. Yes, it is blocked from the sea, BUT! Friendly Russia is behind China! The Trans-Siberian Railway, modernized and expanded by BAM, NSR! And then there is access to all the seas: the Caspian, Baltic, Black Sea. Any goods, any cargo and everything by amersikos!
  7. Krasnodar
    Krasnodar 14 November 2017 17: 37 New
    +1
    So I want to buy oil futures on the Shanghai stock exchange. I buy for my rubles or shekels yuan.
    The question is, based on what rate will I buy Chinese currency?
    From the calculation of the ruble to the yuan (which is calculated through the dollar) 2) Buy from the calculation of the yuan-euro?
    3) Yuan-pound?
    Or is the second and third option also considered through the dollar? )))
    While the United States is the main importer of Chinese products - all these are childish attempts to write a scenario for the fall of the dollar))))
    Which is held mainly due to the purchasing power of the States.
    1. SPACE
      SPACE 14 November 2017 18: 16 New
      +3
      Quote: Krasnodar
      While the main importer of Chinese products are the United States

      This is not entirely true.
      Quote: Krasnodar
      all these are children's attempts to write a scenario for the fall of the dollar))))

      Of course not yet, but trading in energy futures in RMB is another minus one brick in the US foundation.
      Quote: Krasnodar
      Which is held mainly due to the purchasing power of the States.

      To the printing press, fear and faith, yet ...
      Z.Y. That's when China moves from direct investment and starts printing yuan for export, giving cheap loans to states, then the time will come for the Chinese sunset scenario Pax Americana.
      1. Krasnodar
        Krasnodar 14 November 2017 19: 15 New
        0
        Quote: SPACE
        Quote: Krasnodar
        While the main importer of Chinese products are the United States

        This is not entirely true.
        Quote: Krasnodar
        all these are children's attempts to write a scenario for the fall of the dollar))))

        Of course not yet, but trading in energy futures in RMB is another minus one brick in the US foundation.
        Quote: Krasnodar
        Which is held mainly due to the purchasing power of the States.

        To the printing press, fear and faith, yet ...
        Z.Y. That's when China moves from direct investment and starts printing yuan for export, giving cheap loans to states, then the time will come for the Chinese sunset scenario Pax Americana.

        1) Who is China's main trading partner?
        2) what hinders the US oil trade in the renminbi? Let me buy you an apartment (for example) in RMB now - will you agree? :)
        3) thanks to fear of what and belief in what the dollar holds?
  8. Oilpartizan
    Oilpartizan 14 November 2017 20: 42 New
    0
    An illiterate campaign article, which, after the author’s first sentence, "... China is the most important political and economic competitor of the United States ..." could not be read further.
    It is ridiculous to compare the competitive political struggle of communist China and the imperialist USA.
    The author apparently does not know that the yuan is not hard currency, the rate of which is set by Xi Jinping based on the needs of the domestic market of China. Declarations on its compliance with the world currency did not force world bankers to urgently stock up yuan, which the author himself confirms. His maxim “oil in exchange for the golden yuan” clearly shows that it should be Russian oil and the Kremlin will take the yuan for a look, which they will exchange for dollars anyway in China.
    This is akin to longing for the deceased USSR and the golden ruble, which, in principle, buried him.
    Meanwhile, Trump and Xi signed economic agreements for 260 billion. bucks.
    This is whether there will ever be such a contract with Russia in the future.
    Propelled "Power of Siberia" has already "covered itself with a copper basin", especially after the parties agreed on a project to build an LNG plant in Alaska.
    1. Vadim72
      Vadim72 14 November 2017 21: 27 New
      +3
      Good day to all. I could not help but insert my five cents. Firstly, 260 billion, these are not contracts, these are agreements of intent in the long term, and there, as they say, either the shah will die, or donkey, they will be denounced, re-signed many times. Alas, this is the Chinese business philosophy.
      Secondly, Pushkin wrote: "... he does not need gold when a simple commodity has ...". Who depends on whom? Is China from the USA or is the USA from China? If the USA completely stops trading with China, everything will stop in the USA itself. There will be no iPhones, no Tesla, they will not be able to launch even their own rockets and planes. It's not me, it's American experts think so. And that China, as it traded in its goods, will continue to trade. Yes, we will not miss the recession in China, but this is not critical, they have long stimulated domestic consumption, it is already much higher than trade with the United States. Meanwhile, the United States will either look for ways to bypass its own boycott (if they decide to boycott it), or return to the Stone Age. They have long been unable to produce even toilet paper themselves, not according to Zadornov, not because they are dumb, but for a purely pragmatic reason - it is cheaper in China.
    2. max702
      max702 14 November 2017 23: 21 New
      0
      Quote: Oilpartizan
      Propelled "Power of Siberia" is already "covered with a copper basin",

      Tyu .. Yeah .. It’s like it’s not with a copper basin, but at least in two volumes increase in capacity .. Yes, yes it’s exactly the additional threads that are being built ..
      And Alaskan gas is an attempt at least in something the real invest candy wrappers USA .. The Chinese are not to put them in a mask and google ..
  9. Alex20042004
    Alex20042004 14 November 2017 21: 43 New
    0
    I believe that the political crisis of the mattresses is a confirmation of this. Goodbye $!
  10. iouris
    iouris 14 November 2017 23: 57 New
    0
    Dreaming. Rather, China will bend us by proxy from the States.
  11. Ural resident
    Ural resident 15 November 2017 01: 21 New
    0
    I don’t think that in the end the USA will come to naught as a world power ...
    But they will weaken unambiguously and they will have to make a fuss in competition with China.
    We are all profitable. But we must understand that replacing the yuan dollar - it will be as dangerous hegemony as the dollar.
    As if in the future we did not have to support the dollar so that it could compete with the yuan).