The currency war we have been reporting on for ten years at least, the bid by China and its allies led by Russia and Iran, to replace the US$ as global reserve currency is hotting up.
For some time now China has quietly been making deals, first with its BRICS partners but more lately with all takers, to abandon the Bretton Woods convention by which international trades are customarily settled in U S dollars. A few years ago China, in collaboration with Russia and Iran, created the Petroyuan as a rival for the Petrodollar, the vehicle in which all crude oil futures contracts were made since the early 1970s.
Gradually at first, but now at an accelerating rate, nations are agreeing to trade in Yuan or in the currency of the vendor's nation. The Chinese government says it’s now signed $582.3 billion worth of global currency settlement agreements that will exclusively utilize the yuan.
According to a new report from the Chinese state news organisation, China Daily, the country’s central bank has inked deals with more than 40 countries and regions since 2016.
As for the countries involved in the pacts, China highlights Russia, Venezuela, the United Arab Emirates, Oman, Bahrain, Qatar, Kuwait and Saudi Arabia.
China says its moves are designed to boost the yuan’s role in international trade and circumvent the need of developing nations to depend on the US dollar and thus be vulnerable to coercion by the US government. The Mafia - like way Washington operates its resrve currency scam has been illustrated by the response to the war in Ukraine. The American government tried to stop weaker nations doing business with Russia by threatening economic sanctions on those countries which broke US imposed trade embargoes.
A statement from China's overseas trade department reads: “There is a need to promote cross-border yuan settlement to make bilateral trade more efficient and boost the yuan’s internationalization process…
To be sure, cross-border trade settlement in the yuan will reduce many countries’ dependence on the US dollar.”
China says direct settlement in the yuan will also shield countries against the “weaponized dollar”, pointing to sanctions levied against Russia in the aftermath of the country’s invasion of Ukraine.
As should now be clear to anyone who follows international news, the sanctions imosed on trade with Russia by the USA, EU and NATO has backfired badly and harmed the sanctioning nations more than those targeted. This is because business that previously have been conducted directly between Russia and nations involved in sanctions is now being routed via China, India, Pakistan, Itan, Syria and Turkey.