It can really be said that the time comes and goes, and the heroes are not free. When everyone is immersed in how China-EU relations will change during China's visit to the three European countries. However, there are different voices in the Middle East, and not only the Palestinian-Israeli conflict is more irreconcilable, but also Saudi Arabia, as the main body of petrodollars, has sent a bombshell news that Saudi Arabia and China will cooperate on challenging issues. Is Saudi Arabia going to abandon petrodollars? Will the foundations of dollar hegemony be uprooted once and for all?
Saudi Arabia gave a big gift
The world is in tatters, and China is mending it. When the United States made the most severe threat to China's trip to Europe, it did not expect that its own big backyard would catch fire, and even its own foundation would be loosened because of it.
Recently, according to the Economic Observer, as the deputy minister of investment of Saudi Arabia, Selnate said at the event of the Hong Kong and Saudi capital market forum that the importance of China is gradually highlighted, and Saudi Arabia hopes to strengthen not only industrial cooperation with China but also to strengthen capital cooperation, and said that it will cooperate with China on challenging issues.
It can be said that this challenging question is very convincing. And at the same time, the country is also planning to buy oil in local currency.
You know, Saudi Arabia is now one of the BRICS members. Moreover, during the expansion of the BRICS last year, some countries such as Brazil advocated de-dollarization and diluted the existence of the dollar with other currencies or local currency settlements.
Earlier this year, Egypt made the same noise, and it can be said that the de-dollarization has now become the general trend.
Some people may think that Saudi Arabia has not mentioned that it will be settled in RMB, so what good is this for us? Although it is not mentioned, it is already important to us without the dollar, how can it be so easy to replace the dollar?
And you must know that Saudi Arabia has been hesitating on the petrodollar issue before, and the biggest reason for this is Saudi Arabia's concern about the future, so Saudi Arabia has always adopted the method of small steps.
And the first stop is Saudi Arabia's younger brother UAE. You know, the UAE and United Petrochemical Singapore launched the first RMB-settled natural gas trade with United Petrochemical Singapore last year.
This is the symbol, so to speak. You must know that a transaction is not simply a matter of handing over money and delivering goods in one hand, but a systematic process.
Previously, this process was designed for US dollar settlements. The well-known settlement system
SWIFT is the key, so if you want to complete the large-scale settlement of RMB, you must first run through this system.
And in addition to the UAE's test settlement, there was also news that China had provided RMB loans to Saudi Arabia for trade settlement. You know, whoever is the richest in the world has a piece of cloth on his head. Saudi Arabia dares to say that it is third, and no one dares to say first.
Every year, Saudi Arabia earns nearly 100 billion US dollars in profits from Saudi Aramco alone, and Saudi investment funds are holding trillions of US dollars in assets.
After all, China has always imported more oil and other resources from Saudi Arabia than it has exported to Saudi Arabia, which has resulted in Saudi Arabia earning only dollars and not RMB, and it has to take out loans if it wants to spend RMB.
From loan to settlement to investment, it can be said that this is a huge systematic project. And Salnate also said that by 2030, Saudi Arabia's investment plan will be 32,000 US dollars, and China will be its investment focus in the future.
And at the same time that Saudi Arabia has said that it will discuss challenging issues with China, China has also welcomed an important guest, that is, the Pakistani foreign minister will visit China.
Many people may wonder, what does Pakistan's visit to China have to do with Saudi Arabia? In fact, Pakistan has always had the title of Saudi Arabia's knife guard, and many Sino-Saudi Arabia cooperation projects have gradually landed in Pakistan, so the petrodollar for security, and now the knife guard provides security, so the next step is worth imagining.
The loss of the petrodollar
The so-called wall fell down and everyone pushed it, and the drum was beaten by thousands of people. And today the United States is facing a situation of disintegration. Japan and South Korea are acting, Europe is preparing, and now even the Middle East is about to accelerate, and the petrodollar may be accelerating to an end.
The development of history is never linear, but jumpy. If many people were to go back to 2017, it is estimated that no one would have imagined that the dignified beacon of the world would reach such a point.
And you know, when everyone realizes that the hegemony of the dollar is coming to an end, the first thing they do is to run away quickly, after all, a gentleman does not stand under a dangerous wall.
And now we see that France has said that it wants to strengthen cooperation with China, and at the same time, it has said that France should think more about its own interests. The aim of this Saudi Arabia-China cooperation on challenging issues is to gradually shift more Saudi investment from the West to the East.
We need to know that in the past, the focus of Saudi investment has been in the West. On the one hand, Western investment has a high rate of return, and on the other hand, it is because if you do not invest in the West, how can you make the United States trust.
Saudi investment in the West is actually more like a "hostage" left in the West. In exchange for the trust of Europe and the United States.
Now that we want to part ways with the United States, the first step must be the transfer of assets. This cannot be said to be exactly the same as Russia's operation before the Russian-Ukrainian conflict, it can only be said that it is not much different.
And in the last two years, Saudi Arabia has earned a huge trade surplus. In 2023 alone, Saudi Arabia's profits will reach about 100 billion US dollars, but Saudi Arabia has not increased its holdings of US bonds, and has even declined. In other words, the speed of asset transfer in Saudi Arabia is very fast.
At the same time, while Saudi Arabia is increasing its investment in China, Saudi Arabia is also inviting Chinese companies to participate in the Saudi Vision 2030 project. Will the trade settlement be all in dollars?
You must know that the purchase of oil needs to be settled in US dollars, but there is no fixed Saudi Arabia that needs to use US dollars to buy Chinese service industries. Is it possible to use bookkeeping, and finally use oil to offset or loan RMB?
And one thing that we all know very well is that when China and Saudi Arabia signed the relevant agreement, they mentioned a point in time, that is, 3-5 years to gradually implement local currency settlement, etc., so all this is being carried out in an orderly manner.
In addition, another phenomenon that has gradually emerged recently is that the European Union, Japan and South Korea, which have been keeping pace with the United States, have begun to make small moves.
Japan secretly sells U.S. bonds and buys yen to dig into the corners of the dollar. And Europe has directly stated that it will start cutting interest rates in June.
Even Sweden, which jumped against the trend, directly cut interest rates by 25 basis points and directly rushed ahead, ignoring the US order. It can be said that the United States has gradually become a loner.
Even if the Fed makes various statements, whether the US will keep interest rates high or raise interest rates will not be able to curb the decline of the dollar. Perhaps now is the highlight of the future dollar, and it will also be the last highlight of the United States.
The final game between China and the United States
The future of the petrodollar has long been doomed, and for us, instead of continuing to patch up the petrodollar system, it is better to speed up the establishment of a new system, so as to get rid of the influence of the dollar.
Now we see that although the United States is still struggling, and the top level of the United States continues to shout for the dollar, the tide of history has been formed, and the dollar has long been a yellow flower.
Some people here may say that now that the harvest in the United States is still going on, and the whole world is working hard to resist the tide of the dollar, why is it said that the dollar is already a thing of the past?
Because the current dollar tide is like the United States is going to kick Russia out of SWIFT, it looks like a financial nuclear bomb, but how powerful can it be when it lands?
And according to recent media reports, the mortgage interest rate in the United States has now reached about 7.22%, and this has exceeded the highest value since November 2023. Even the Federal Reserve has come out to warn that commercial real estate overdue in the United States has reached pre-pandemic levels.
And this means that the current United States has long been unable to hold on, and it is more of a hard resistance or oral resistance. From rate cuts to no rate cuts, to rumored rate hikes. It can be said that the Fed may not be clear about what it intends to do.
However, it can be clearly seen that the probability that the United States will not be able to bear it is getting bigger and bigger. As for Japan's rapid depreciation, it can only be said that Japan is special, after all, no one except Japan will do it, holding a large amount of foreign exchange reserves, and finally starved to death.
Therefore, the current game between China and the United States seems to be a game between China and the United States, but it is actually a game between two worlds. China's trip to Europe illustrates one point, that is, even America's half-brothers are beginning to betray the United States.
Coupled with the rapid follow-up of Saudi Arabia, China has recently vigorously sold US bonds to buy gold. All this shows that the changes in the world are accelerating. At the same time, China, as Iran's largest oil importer, has an annual volume of 10 million tons to ensure the stability of the situation in the Middle East.
Recently, the Palestinian-Israeli conflict does not seem to have achieved the expected effect, so how it will develop next may also be a very critical point. And this will completely change the situation in the Middle East, and the collapse of the petrodollar may also be greatly accelerated.
As for us, we should follow the trend and send the last ride to the United States is the right way.
Information sources:
Reference news: German media: The Federal Reserve maintains high interest rates to exacerbate U.S. debt risks
Sputnik News Agency: Pakistani Deputy Prime Minister and Foreign Minister Dhar will visit China
Yonhap News Agency: China provides RMB loans to Saudi Arabia for trade settlement, challenging the hegemony of the US dollar
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