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Introduction:
In today's international trade arena, a series of events have taken place that are cause for concern. The Middle Eastern country United Arab Emirates reached a liquefied natural gas energy procurement agreement with China, used RMB for trade settlement, the United States tore up its commitment to refuse to buy Saudi Arabia's strategic reserve oil, and OPEC announced production cuts, all of which have sparked heated discussions in the international community. Let's dive into the ins and outs of this series of events.
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China recently signed a major energy purchase agreement with France's Total to purchase 65,000 tonnes of liquefied natural gas from the UAE. This agreement will enrich China's energy import channels and contribute to ensuring the stability and security of its energy strategy. The most interesting thing is that this trade settlement no longer uses US dollars or euros, but uses RMB for settlement, which marks the acceleration of the internationalization of RMB.
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However, this move appears to be a challenge to the US dollar hegemony. Some analysts believe that the UAE's choice to use RMB for payment and settlement this time can be regarded as one of China's plans to weaken the dominance of the US dollar in global trade. The other plan comes from Brazil, which announced that they would abandon the dollar in trade settlements with China, which also raises concerns, because Brazil's influence in South America, although not as large as that of Western countries, cannot be underestimated, which could trigger other countries to follow suit and seriously damage the dollar's hegemony.
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With the rise of China's comprehensive strength, the share of RMB in international trade settlement has gradually expanded. Although the renminbi currently accounts for only about 7% of global trade settlement, far behind the US dollar at 40%, it has become the world's fifth largest payment currency, third largest trade settlement currency and fifth largest reserve currency. The pace of this progress, which took less than 20 years, has led the United States to worry that the large-scale use of the renminbi for energy and other trade settlements will have an incalculable impact on the dollar.
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However, the U.S. government's concerns are not limited to the internationalization of the renminbi. Recently, many countries in the Middle East announced oil production cuts, which will last from May to the end of December this year, with a total duration of more than half a year. This move is a counteraction by Saudi Arabia and other countries, in response to the Biden administration's move to break the treaty. The Biden administration promised Saudi Arabia to buy a large amount of Saudi strategic reserve oil when oil prices fell, but it did not fulfill its promise, much to Saudi Arabia's annoyance.
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This time OPEC collectively announced production cuts to bring double pressure to the United States. First, higher oil prices will exacerbate the domestic inflation problem in the United States and increase Russia's oil revenues. Second, the reduction in oil production weakens the hegemony of the dollar and reduces the dependence of global countries on the dollar, which is unacceptable for the Biden administration.
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However, Saudi Arabia acted resolutely, especially after rapprochement with Iran with China's support, and the hands of the United States to contain Saudi Arabia gradually decreased. If the U.S. continues to maintain its arrogant attitude, Saudi Arabia's actions may become tougher, which will be a huge challenge for the U.S. government.
The development of these events will have a far-reaching impact on the international political and trade pattern, and also trigger global doubts and rethinking of the hegemony of the US dollar.
Revelation:
This series of events reveals some profound points. First, the adoption of RMB settlement for China's international energy trade marks an acceleration of RMB internationalization as part of China's market-oriented oil and gas reform. Second, it poses a challenge to the hegemony of the dollar, as more and more countries choose to settle trade in their own currencies, which may weaken the dominance of the dollar in global trade. In addition, the counteractions of Middle Eastern countries suggest that some US policies and commitments can provoke discontent, leading to a complex set of geopolitical and economic consequences.
Summary:
This series of events highlights China's rising in the international energy market and the internationalization of the renminbi. The RMB settlement of the energy purchase agreement signed between China and the UAE marks the acceleration of China-market-oriented oil and gas reform and poses a challenge to the hegemony of the US dollar. Although the renminbi's share of global trade settlements is still low, it quickly rose to prominence as the world's fifth-largest payment currency, third-largest trade settlement currency and fifth-largest reserve currency, a process that took just 20 years. This accelerates the trend towards de-dollarization and could have an immeasurable impact on dollar hegemony.
On the other hand, the counteractions of Middle Eastern countries pose a challenge to the United States. The U.S. government's failure to fulfill its oil deal promises with Saudi Arabia has led to production cuts, which could lead to higher oil prices and global inflation. In addition, Saudi Arabia's actions may weaken the hegemony of the dollar and reduce the dependence of global countries on the dollar. Saudi Arabia, backed by China, has more leverage, which could bolster its countermeasures.
Taken together, these events show that the international energy market and global trade pattern are changing, with China emerging to the fore, dollar hegemony facing challenges, and geopolitical factors also having an impact on the global economy. Against this backdrop, countries need to respond carefully to adapt to these changes and safeguard their economic and political interests.
This series of events provides us with some profound lessons and perspectives. First, the rules and patterns of international trade are undergoing dramatic changes. Traditionally, the U.S. dollar has dominated international trade and energy markets, but now more and more countries are looking to diversify trade settlements, which has important implications for the global financial system. It also reminds us that the world is multipolar and that no single currency can dominate everything.
Second, these events highlight the strong links between geopolitics and economics. The policies and commitments of the United States Government have had a direct impact on the countermeasures of Middle Eastern countries. This shows that international affairs are interconnected and that a country's policy decisions can trigger a ripple effect on a global scale. Therefore, international cooperation and diplomatic settlement of disputes are particularly important.
Moreover, China's rise has become increasingly evident in international affairs. China is not only one of the world's largest energy consumers, but also plays an increasingly important role in international trade. This shows that China's rising position in the global economy and politics must be fully taken into account. At the same time, China's internationalization process reminds other countries that they need to adapt to the new realities and reassess the dynamics of international cooperation and competition.
Finally, these events raise concerns about global energy supply and prices. Oil and gas are a key component of the global economy, and any event that affects the supply and price of these resources can have a profound impact on national economies. Therefore, energy security and sustainable development remain important issues that governments need to pay attention to.
In short, the choice of RMB for trade settlement between Middle Eastern countries and China, as well as the counteractions of Middle Eastern countries against the US government, reflect changes in the international trade pattern and geopolitics. These events remind us that the global economic and political system is dynamic, and that countries need to respond flexibly to safeguard their interests, while also deepening international cooperation to address common challenges and problems. In this changing world, neutrality, balance and cooperation have become particularly important to ensure shared prosperity and peace among nations.
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