China and Russia have made a big move against the United States; the hegemony of petrodollars has collapsed

Text/Yang Chen

During the Spring Festival, Russian President Vladimir Putin visited Beijing and attended the opening ceremony of the Beijing Winter Olympics. China and Russia signed 15 agreements and issued a joint statement. One of the 15 agreements is about energy cooperation: over a 10-year period, Russia will provide 100 million tons of oil to the Chinese side through Kazakhstan's pipelines for use by petrochemical companies in Xinjiang. The Sino-Russian energy deal is about to adopt euro settlement, and taking practical actions as a platform for Europe is equivalent to joining hands to send a big gift to Europe, so that the euro and the dollar can be carried the international settlement system, and another shot has been fired to disintegrate the hegemony of the dollar.

Previously, China's oil trade with Iran has been settled in renminbi, which shows that China's renminbi has become the international payment currency for oil transactions. Iran is one of the world's top oil producers in the world and plays a pivotal role in the international oil market, and a large part of China's oil reserves come from Iran.

Citing network data, according to the "National Petroleum Reserve Medium and Long-term Plan", China should form a reserve scale equivalent to 100 days of net oil imports. According to Reuters quoting an industry source and ship tracking company Vortexa Analytics on January 20, China has unloaded nearly 4 million barrels of Iranian crude oil into the national reserve tanks of the southern port city of Zhanjiang in the past few weeks, and since late December last year, a batch of 260,000 tons of Iranian oil has been unloaded in Zhanjiang, and another batch of similar-sized oil has been unloaded at the same port for emergency reserves. According to the comprehensive data monitored by Reuters on January 29, in the past 24 months, Iran has shipped about 20 million tons of oil to the Chinese market, the transaction volume has reached a record high, China has used the renminbi to settle the first order for Iranian oil, and most of the transactions are carried out in yuan or euros, which shows that the renminbi has played the role of oil currency, and plans to sign more such contracts in the future.

As early as March 27, 2021, China and Iran signed the China-Iran 25-Year Comprehensive Cooperation Agreement, which will be settled in RMB in oil trade. At about the same time, the UAE has also reached a consensus with The Chinese side to further promote local currency settlement. Previously, China's oil and gas transactions with Russia had been settled in renminbi. Due to the trend involving the internationalization of the renminbi and the US dollar, this move has attracted the attention of the world. There is also Saudi Arabia, which has long been looking for an alternative to the petrodollar, especially in the face of the us low-priced shale oil to seize the market, which will force the latter to seek a more independent position, reduce its dependence on the US dollar, and hope to raise a lot of funds through the listing of saudi Aramco, the country's largest oil company, so as to get rid of the status quo of excessive dependence on oil revenues, which is equivalent to de-dollarization in a very hidden way. More than two years ago, BWC Chinese network reporters through email surveys of some U.S. crude oil futures trading investors showed that they said that after the pricing function of RMB crude oil in the Asian market appeared, this trend was more obvious, the price fluctuations and trading volume of the market were driven, and the most direct performance was that U.S. traders finally began to frequently focus on the night market of RMB crude oil futures. At that time, some analysts believed that Saudi Arabia may also be considering using yuan to settle crude oil trade with Chinese buyers, and if it is determined, then some other large oil exporters will soon follow, and the entire crude oil market will follow, accepting the new rules for settling crude oil in yuan, or becoming the most crucial step to end the petrodollar early.

Not only Iran, but also Venezuela on the doorstep of the United States, also settled oil transactions in renminbi a few years ago. Quoted from the website of the China Petroleum News Center: According to foreign media reports, in August 2019, Venezuela's national oil company PSDV received a payment for oil in renminbi, which marks that Venezuela has begun to officially use the renminbi instead of the dollar to price oil, and Venezuela also calls on global oil countries to switch to renminbi to denominate, trade and settle oil.

Venezuela is currently the country with the largest oil reserves in the world, and more than 90% of the country's domestic fiscal revenue depends on the oil industry, which can be said to be the pillar industry of Venezuela. In response to this situation, the United States launched a series of precise crackdowns and sanctions on Venezuela, and in July 2017, the United States proposed to ban any oil transactions settled in the form of dollars against the Venezuelan National Oil Company, which is the most stringent sanction in the history of the United States. In August of the same year, the United States announced that it would prohibit U.S. financial institutions from participating in transactions related to the issuance of new bonds and equity by the Venezuelan government and state-owned Venezuelan oil companies, as well as the purchase of some bonds that have already been issued. In response to four consecutive rounds of U.S. sanctions, in September of the same year, Venezuela announced that it would abandon the US dollar and switch to a basket of currencies such as the euro, the renminbi, the euro, the yen, and the Russian ruble.

"Venezuela was originally an important source of heavy crude oil imports from the United States, but since the sanctions contradiction between the two countries intensified, the amount of crude oil imported by the United States from Venezuela has also shrunk." Xi Jiarui, a crude oil analyst at Jinlianchuang, said that before 2017, the United States imported more than 1 million barrels of Venezuelan crude oil per day, and in the first half of 2018, the United States bought about 780,000 barrels of crude oil from Venezuela every day, but from February 2019, the amount of oil imported by the United States from Venezuela began to plummet, and by March it was almost zero. Xi Jiarui believes that in this sense, the dispute between the United States and Venezuela has also promoted the internationalization of the renminbi, as of the end of 2018, at least 28 countries and regions around the world can use the renminbi as a settlement currency, such as Turkey, Pakistan, Russia, Nigeria, Iran, Algeria, etc. In addition, China has signed bilateral local currency swap agreements with Japan, South Korea, Argentina, the United Kingdom, Switzerland, Brazil and other countries and regions. This shows that instead of the US dollar, more stable and secure local currencies of various economies are used to carry out international transactions, and there are not too many technical problems.

However, now, Iran, Venezuela, Russia and major oil producers including the United States' traditional Middle East ally, the United Arab Emirates, have carried out RMB oil transactions with China, and the European Union, the world's main currency, has also been used by the mainland and Russia in cooperation, joining the ranks of de-dollarization, and the end of the dollar oil system is unstoppable. In addition, this move can also prompt China to more firmly take the route of diversification of foreign exchange reserves, in the past, China reserves more dollars, but the United States can not move "quantitative easing to cut leeks", over-reliance on dollar reserves does have a great risk, in the future, in addition to oil, the mainland can also achieve real-time trading in currencies such as RMB or euro in more commodity fields, China is the world's largest resource and the largest buyer of most commodities, itself should have pricing power and the option to use currency settlement.

Wei Jianguo, a special expert of the Go Global Think Tank (CGGT), former vice minister of the Ministry of Commerce, and vice chairman of the China Center for International Economic Exchanges, believes that the current use of RMB denomination in oil trade between China and Iran and the United Arab Emirates not only shows that the hegemony of the US dollar is shaken, but there will be more commodities including copper ore, iron ore, potash, coal, etc., which have successively adopted the RMB as the denominated currency, and the internationalization of the RMB is accelerating.

The use of euros for the Sino-Russian oil order is also of great significance. Especially under the premise that the Russian-Ukrainian crisis has aroused global concern and provoked European nerves, the agreement between China and Russia will arouse the concern of all relevant parties.

In the international energy trading market, with the euro-oil settlement system, for the dollar -oil settlement system, it is a big challenge, China and Russia are big countries with global influence, Russia is also one of the largest oil producers in addition to the Middle East, China is also the world's largest oil buyer, the international oil market has a pivotal role; the European Union and the Middle East itself are unable to withstand the pressure of the United States, but China and Russia have the strength not to fear the Pressure of the United States, never follow the baton of the United States. The agreement between China and Russia is equivalent to joining hands with the EU to help the EU do something that is difficult for the EU to achieve on its own, and with the strong support of China and Russia, the EU has also joined in replacing the petrodollar, which is stable. Not only that, the agreement may attract large oil producers in the Middle East and other customers who need oil and natural gas, and also follow the trend of adopting the euro-oil settlement system. The EU's generous gift from China and Russia in the field of energy is a major strategic benefit for the EU. Europe is doing business with China and Russia better than following the United States.

Previously, under the pressure of the United States, the living space of the euro was limited, but if Europe did not act as an accomplice of the United States, China and Russia could play more roles in "escorting" the euro.

The so-called one goes and the other. The global energy trading market, the use of euro -oil settlement system more, the corresponding use of the dollar - oil settlement system is less, will show the euro rise, the dollar decline trend, then the dollar hegemony will gradually exhaust, although the process is slow, the renminbi is one of the safe currencies for settlement of oil outside the dollar, especially in electronic currency, there are other countries' local currencies can not reach the status of the role. If electronic money is the future trend of market transactions, electronic money issued by the mainland will become a settlement currency in the process of oil trading, and it will also become a trend. Of course, in addition to the renminbi, the euro, other relatively strong and safe currencies can also be added to the oil trade and even other transactions to de-dollarization of economic activities, international trade dollars a dominant era will eventually become the past, the United States through the dollar green paper and other tools to control the harvesting of the world economy, plunder the wealth of other countries dirty moves, will also usher in one terminator after another, in this regard the United States can not stop.

It is often said that there are too many economies that want to get rid of the oppression of the United States, but the economy is too affected by military and international political relations, and some small and weak economies cannot resist the oppression of the United States alone. In the process of sharing the world economic cake together, other countries can of course choose to join the China-Russia team and steadily get rid of the economic control and plunder of the United States.

Combined with the previous crisis on the border between Kazakhstan and Russia and Ukraine, and the war waged by historians against the Federal Republic of Yugoslavia by the United States against the eurozone, the United States often has the color of serving its economic oligarchy and hegemonic interests behind the disputes provoked by the United States. The biggest stumbling block to the formation of the international community of Italy and Interests is the US imperialism and its followers. Without effectively curbing this evil force, the international community of righteousness and interests and the economic community will be able to develop in a good direction. For example, the Belt and Road Initiative, although it has attracted many countries from Eurasia and even five other continents to join, there are many small actions behind the scenes of the United States and Japan, which is bound to adversely affect development. As the two largest countries along the Belt and Road, it is necessary for China and Russia to work together to safeguard their respective interests and escort the belt and road to a stable and far-reaching future, and the international community also expects China and Russia to take more active actions to curb various unjust acts that go against the tide of history.

Some online commentators believe that the "petrodollar" is the basis of the dollar hegemony, and China and Russia start from themselves and no longer use the US dollar when doing oil transactions. After this head opens, if it continues to develop, the use of dollars in oil trading or, more broadly, energy transactions, is becoming less and less. When a qualitative point is reached, the dollar hegemony will loosen or even collapse. The move also achieved three eagles with one stone. The first arrow further guaranteed China's energy security and Russia's economic security. As we all know, China is the world's largest importer of energy, however, our energy security can not be effectively guaranteed, the main reason is that most of our energy comes from the Middle East, but the world's important energy channels are controlled by the US military, especially the Old American garrison in Singapore, guarding the Strait of Malacca, if the situation changes, at any time to our energy channels to make a major threat, and even cut off our energy channels in the Strait of Malacca. The second is that Russia has been sanctioned by the United States and the West in recent years, and its economy has plummeted and its recovery has been weak. Therefore, the 10 billion US dollar energy order signed by China and Russia not only ensures our energy security, but also plays an important role in Russia's economic security. The second arrow, supporting the euro, dividing and disintegrating the Western camp, as we all know, although Europe and the United States are ostensibly an alliance relationship, they are not monolithic, and even full of contradictions, especially the challenge of the euro to the dollar, has always made the United States like a fish in the throat, want to die and then fast, when the euro was just born, once more than the dollar is stronger than the dollar, at this time, the United States launched the Federal Republic of Yugoslavia war, the purpose is to create chaos in Europe, hit the euro, the result is that the United States achieved his goal, the euro was hit hard, Far behind the DOLLAR, but last year the euro surpassed the United States and became the world's largest settlement currency, which made the United States unable to sit still, so it tried every means to encourage the War in Ukraine, the fundamental purpose of which is to create war in Europe, chaos, and strike the euro. The third arrow, accelerate de-dollarization, as we all know, now the world's biggest unfairness and the root cause of world chaos is the dollar hegemony, so de-dollarization is the will of many countries in the world, especially Russia and China, de-dollarization, has become the strategy of our two countries, then some netizens will ask, why does China-Russia trade not use the renminbi? As we all know, the internationalization of the renminbi is a long process, just the so-called speed is not reached, not to mention that we can not completely open the financial sector, the renminbi can not achieve free convertibility, in this case, if the energy trade between China and Russia has to be settled in renminbi, not only offends the United States, Europe may not be very happy, not to mention that only by relying on this energy order between China and Russia, the help for the internationalization of our renminbi is not very large, based on this situation, we use the euro settlement, which ensures our energy security. It has also supported the euro and struck at the hegemony of the dollar, which is the so-called three eagles with one stone.