China the world’s second-largest oil importer, roughly 8m barrels per day, is planning to launch a yuan-denominated oil contract which could spell the end of dollar dominance.
The communist country is also the second largest oil consumer, with the United States as the largest, which makes China a very distinct customer for countries that export oil. If China were to challenge US dominance in oil markets, the Communist nation could make serious waves.
However, China is not the only country that could benefit from a “Petro-Yuan,” in fact other countries such as Russia, Iran, and Venezuela could significantly benefit from the potential Chinese move. The United States has sanctions against each oil exporting country mentioned above, and with the petro-yuan, US sanctions could become partially void.
The Chinese government previously announced plans to start a crude oil futures contract priced in yuan and convertible into gold.
This is not the first time a country or leader has attempted to upend US dollar dominance, in fact, according to Max Keiser; “Saddam Hussein wanted to trade oil in Euros and he was killed, Muammar Gaddafi wanted to trade his energy in something other than the US dollar – he was killed.” Xi Jinping, however, has the ability and resolve to pull this move off, because again according to Keiser, the move is backed by several countries mainly Russia and Iran.
Saudi Arabia, a key country to the dollar’s dominance, only recently joined the bandwagon of antagonist countries because of US actions to levy blame on the Muslim nation for playing a role in 9/11.
China has plans to launch the contract by the end of the year, within two months, and if that is successful, then over the course of the next few months to years, if other countries adopt the petro-yuan, then China could rally enough support to challenge the petrodollar.
However, according to Keiser, when other countries have tried to embark on this journey the United States has thwarted the ambitions of those nations by invasion, war, or by any means necessary. Being that China has the resolve to challenge the US could this path lead to the inevitable, The Thucydides Trap?
The Thucydides Trap theory, popularized by American professor Graham T. Allison, is based on historical evidence that when a rising power threatens to usurp a ruling power’s dominance, war is inevitable. Over the course of 500 years, twelve out of sixteen times, war has occurred. According to Thucydides; “It was the rise of Athens, and the fear that this instilled in Sparta, that made war inevitable.” Professor Graham alleges that China’s rise and threat to US dominance is a key indicator that we have potentially entered The Thucydides Trap.
A war between these two nations would spell disaster, regardless of the victor. However, China’s rise has not been the result of the communist nations resolve, instead corruption currency manipulation and disinformation have aided the nation.
To weaken the United States, China bribed a US President to allow the entrance of the communist nation into the World Trade Organization in 1996. All of which has destroyed the US manufacturing sector. Also, the latest campaign against the United States has been with global accords such as Climate Change.
The Paris Agreement set forth further restrictions against the United States and created an “unfair playing field” when it comes to trade. According to President Trump, the Paris Agreement aided foreign countries and restricted the US.
Section from Speech: Statement by President Trump on the Paris Climate Accord on June 01, 2017
Compliance with the terms of the Paris Accord and the onerous energy restrictions it has placed on the United States could cost America as much as 2.7 million lost jobs by 2025 according to the National Economic Research Associates. This includes 440,000 fewer manufacturing jobs — not what we need — believe me, this is not what we need — including automobile jobs, and the further decimation of vital American industries on which countless communities rely. They rely for so much, and we would be giving them so little.
According to this same study, by 2040, compliance with the commitments put into place by the previous administration would cut production for the following sectors: paper down 12 percent; cement down 23 percent; iron and steel down 38 percent; coal — and I happen to love the coal miners — down 86 percent; natural gas down 31 percent. The cost to the economy at this time would be close to $3 trillion in lost GDP and 6.5 million industrial jobs, while households would have $7,000 less income and, in many cases, much worse than that.
Not only does this deal subject our citizens to harsh economic restrictions, it fails to live up to our environmental ideals. As someone who cares deeply about the environment, which I do, I cannot in good conscience support a deal that punishes the United States — which is what it does -– the world’s leader in environmental protection, while imposing no meaningful obligations on the world’s leading polluters.
For example, under the agreement, China will be able to increase these emissions by a staggering number of years — 13. They can do whatever they want for 13 years. Not us. India makes its participation contingent on receiving billions and billions and billions of dollars in foreign aid from developed countries. There are many other examples. But the bottom line is that the Paris Accord is very unfair, at the highest level, to the United States.
Further, while the current agreement effectively blocks the development of clean coal in America — which it does, and the mines are starting to open up. We’re having a big opening in two weeks. Pennsylvania, Ohio, West Virginia, so many places. A big opening of a brand-new mine. It’s unheard of. For many, many years, that hasn’t happened. They asked me if I’d go. I’m going to try.
China will be allowed to build hundreds of additional coal plants. So we can’t build the plants, but they can, according to this agreement. India will be allowed to double its coal production by 2020. Think of it: India can double their coal production. We’re supposed to get rid of ours. Even Europe is allowed to continue construction of coal plants.
In short, the agreement doesn’t eliminate coal jobs, it just transfers those jobs out of America and the United States, and ships them to foreign countries.
This agreement is less about the climate and more about other countries gaining a financial advantage over the United States. The rest of the world applauded when we signed the Paris Agreement — they went wild; they were so happy — for the simple reason that it put our country, the United States of America, which we all love, at a very, very big economic disadvantage. A cynic would say the obvious reason for economic competitors and their wish to see us remain in the agreement is so that we continue to suffer this self-inflicted major economic wound. We would find it very hard to compete with other countries from other parts of the world.
When China entered the World Trade Organization, US Corporations moved manufacturing wholesale to China. The communist nation does not have restrictions or policies that protect citizens and workers from human rights abuses allowing products and food to be produced at incredibly low prices. As a result, the US lost thousands of jobs and droves of economic dominance.
With the Paris Agreement, once again, China was aided, and the US was restricted. Being that China could produce coal unrestricted the communist country could dry up the dwindling US energy sector, namely coal, and export their coal back to the United States.
The same tactic, bribery, was used just recently during the Obama administration’s Uranium One deal, except this time by Russia. Twenty percent of US Uranium is now owned by Russia.
China, slowly but surely, has made drastic moves against the United States, not militarily, but rather economically. The Communist country is actively engaged in attempting to usurp US dominance, and such is evidenced by their actions against US interests.
China’s latest agenda to usurp the petrodollar could benefit several countries around the world such as Iran, Venezuela, Russia and several others all of which happen to be active opponents of the United States making the likelihood of a rivalry to the petrodollar probable.
In addition, China is making vast waves in the green energy department by swooping into ally with Germany and other parts of Europe. The advancements mentioned above by the communist nation outline an objective, to dethrone the hegemony of the United States internationally. The question is however, will China move to destabilize capitalism to install a form of international socialism, i.e., globalism?
Learn More About Communism and the History of China
Unknown. “China's launch of 'petro-yuan' in two months sounds death knell for dollar's dominance.” RT. . (2017): . .
Jon Fingas. “China aims for an industry-changing ban on fossil fuel cars.” Engadget. . (2017): . .
David Sheppard and Anjli Raval in London, Xinning Liu in Beijing. “Traders nervously eye China’s strategic oil imports.” Financial Times. . (2017): . .
Reuters Staff. “China's crude imports hit second highest on record in May.” Reuters. . (2017): . .