Russia And China Prepare To Ditch Dollar In Bilateral Trade

 

In a time when many nations have gone public with their intention to ditch the dollar in part or in whole, in bilateral trade with non-US counterparts, either to prevent the US from having “veto power” of commerce courtesy of SWIFT or simply in response to Trump’s “America First” doctrine, attention has long focused on Russia and China – the two natural adversaries to the US – to see if and when they would accelerate plans for de-dollarization.

Russia Finance Minister: We May Abandon Dollar In Oil Trade As It Is Becoming “Too Risky”

Breaking the tie between oil and the U.S. Dollar means the collapse of the U.S. Dollar as the world reserve country. Collapsing of the U.S. Dollar as world reserve currency means the collapse of America. Ghadaffi attempted it, as well as Saddam Hussein and look how that worked out for them. Iran, Syria, China, Russia all want to. Economic warfare always precedes a hot war, in case you were wondering what’s around the corner.

 

 

One month ago, the bond market and political pundits did a double take when according to the latest Treasury International Capital report, Russia had liquidated virtually all of its US Treasury holdings, selling off the bulk of its US government bonds in just two months, March and April.

And with the US threatening to impose a new set of “crushing” sanctions on Russia, including in retaliation for the alleged Novichok nerve gas attack in the UK, Russia not only intends to continue liquidating its US holdings, but to significantly reduce its reliance on the US Dollar.

Will China take over US as the top Superpower

 

QUESTION: I read a credible theory recently about China taking over US as the top superpower via economic pressures. Namely by replacing the US dollar with the Yuan as the standard currency for international trade. This shift is (supposedly) being enacted through 1) increased control over Developing countries through international lending from the New Development Bank, 2) increasing control over global oil via financial ties to Saudi Aramco and Russia’s Rosneft, 3) trying to denominate global oil transactions in Yuan through the Shanghai oil futures market & backing up the Yuan value with the massive gold reserves China has been accumulating.

My question is whether you see this strategy unfolding as a credible threat to usurping United States’ global domination by China and if so – what might the investment world look like during such a massive upheaval?

China CIPS v Western SWIFT System

COMMENT: Marty; Some people are trying to claim that China in bypassing the Swift System, they are undermining the dollar. The latest absurd statement is that Japan will bypass the dollar and SWIFT System to transact using China’s CIPS system in inter-bank settlement. I really had to laugh at how ignorant this statement is for it would mean Japan will no longer sell anything in the USA. It seems that these people so desperate to kill the dollar clutch at anything and we just laugh in the trading rooms. I think you should address this statement for the naive people out there who are clueless as to real international trade.

Report: America Too Dependent on China’s Ships

If China wanted to mobilize and weaponize its merchant ships for war, it would total over 172,000 that America would have to face. See also HERE for further information.

 

In a future conflict, America could find itself outnumbered and outmaneuvered on the high seas, according to a 2015 report on maritime security published by Hawaii Pacific University.The authors of this report are Capt. Carl Schuster, former director of operations at the U.S. Joint Intelligence Center Pacific, and Dr. Patrick Bratton, associate professor of political science at Hawaii Pacific University. They point out that “the United States has adopted an ‘abandon ship’ policy towards the crucial merchant maritime industry” and let the number of merchant ships flying an American flag dwindle to the lowest number since the end of the Spanish-American War.

Report: China’s Currency Will Diminish Dollar’s Role in International Trade

The Chinese government has taken steps to promote the international use of its currency, the renminbi, which will diminish the dollar’s role in international trade, according to a report from the Brookings Institution.

The steps China has taken to internationalize the renminbi have been gaining traction and the currency now represents the fifth-most important payment currency in the world.

China boosts gold reserves for 5th straight month

Taking advantage of the low price of gold, in November China boosted its gold holdings for the fifth consecutive month, the fastest growth rate since June, the central bank reported Tuesday.

However, November’s $87 billion decline in total foreign exchange reserves was the country’s biggest drop since August’s record-high decline of $93.9 billion.

Putin wants to ax dollar from Russian trade

Russian President Vladimir Putin blasted the government for turning a blind eye on US dollar payments in the domestic oil trade.

“I would like to mention one crucial issue in the development of the energy industry, and the economy as a whole. It is a question of finally stopping the use of foreign currency in internal trade,” said Putin at the fuel and energy presidential commission on Tuesday.

Renminbi could overtake US dollar in a decade: economist

The renminbi could overtake the leadership of the US dollar as an international trade currency with China’s creation of the Asian Infrastructure Investment Bank (AIIB) and its energy alliance with Russia, writes the Beijing-based Reference News.

BRICS Bank, AIIB Pledge Partnership, Loans To Be Issued In Yuan

Over the first half of the year, we’ve built on several narratives that we believe are critical when it comes to understanding how the intersection of geopolitics and economics is set to shape the world going forward.

One of these narratives revolves around the extent to which three China-led ventures are set to supplant traditionally dominant supranational lenders on the way to embedding the yuan in international trade and investment.

The new ventures are the BRICS bank, the Asian Infrastructure Investment Bank, and the Silk Road Fund. We’ve discussed each of these at length and we’ve also shown that in one way or another, they all represent a shift away from the multilateral institutions that have dominated the post-war economic order. 

After Francs Comes Dollar: Greenback Might Skyrocket Soon

 

After the Swiss National Bank (SNB) has undermined global confidence in regulators, any sudden action by the US Fed might trigger a feverish buyout of the dollar, pushing its FX rate sky-high, demolishing the entire architecture of international trade in goods and services.

MOSCOW, January 21 (Sputnik), Kristian Rouz — The recent shock to the currencies markets, having come from Switzerland on 15 January, when the franc appreciated by 23% in a single-day trading session, has badly damaged the international financial stability, with capital leaving the Eurozone and investors feverishly buying out gold and US bonds. Such a dramatic change in FX rate of one of the global reserve currencies has triggered major debt risks worldwide, from Eastern European mortgages to Russia’s burden of excessive corporate debt. Now, across the Atlantic, the robust economic growth and market optimism in the US have spurred the anticipation of the Federal Reserve’s interest rate hike, inevitably triggering the dollar to strengthen.

China plans $16.3bn fund to construct new Silk Road

China plans a $16.3bn fund to finance construction of infrastructure linking its markets to three continents as President Xi Jinping pushes forward with his plans to revive the centuries-old Silk Road trading route.

The fund, overseen by Chinese policy banks, will be used to build and expand railways, roads and pipelines in Chinese provinces that are part of the strategy to facilitate trade over land and shipping routes, according to government officials who participated in drafting the plan.

More policies will be rolled out soon to encourage Chinese lenders to finance infrastructure in countries along the route connecting China to Europe, said the officials. They asked not to be identified as they weren’t authorised to speak publicly about the plans. Chinese companies will also be urged to invest in the countries and bid for contracts, the officials said.

China, Japan and Russia zero in on Latin America

Mexico City (AFP) – The leaders of China, Russia and Japan all descended on Latin America in recent weeks, jostling with the United States to increase their influence, invest and tap into resource-rich markets.

The latest arrival was Japanese Prime Minister Shinzo Abe, who on Monday was in Trinidad and Tobago, the second stop on a five-country tour that began on Friday in Mexico.

Abe’s visit began just as Chinese President Xi Jinping wrapped up his tour, which included stops in Brazil, Argentina, Venezuela and Cuba. Xi signed more than 100 trade agreements on the trip.

Russian President Vladimir Putin was in the region for a week from July 11, stopping in Argentina, Brazil, Nicaragua and Cuba.

BRICS nations could rival US in global influence

The rise of the BRICS countries–Brazil, Russia, India, China and South Africa–may challenge the world order and lead to the end of US domination.

The five countries set up the New Development Bank during a recent summit in Brazil, which offers an alternative to the US-led International Monetary Fund and the World Bank.

The five countries participating in the economic cooperation forum are likely to deepen their cooperation in various fields, which may rival the dominance of the United States and G7 countries in the world.

The BRICS countries will also increase their sway if they can improve their governance, considering the fact that they account for 42% of the global population and their GDP and trade volume each make up for about 20% of the world’s total.

UPDATE 1-Total CEO calls for bigger euro role in oil payments

(Reuters) – Oil major Total’s chief executive said on Saturday the euro should have a bigger role in international trade although it was not possible to do without the U.S. dollar.