China moves to destroy the US dollar as they launch Gold-backed Petro-Yuan

China has just launched the petro-yuan, a gold currency that directly challenges the US dollar, signaling the beginning of the end of the US greenback.



In a massive move against the global domination of the US dollar, the long-awaited Chinese Petro-Yuan was launched in Shanghai. Since China is the largest consumer of oil in the world, this new currency is an international turning point that was a move planned by China to directly compete - and subsequently devalue - the US dollar.

Analysts call the plan, announced by Beijing in September, a huge move against global dollar domination - and reserve currency status.

According to reports, the Chinese government plans to allow the crude oil futures contract to be fully convertible into gold.

As reported by TFTP at the time, in addition to serving as a hedging instrument for Chinese companies, the contract will allow greater use of the yuan in commercial liquidation.

These contracts will then allow Chinese business partners to pay with gold or convert the yuan into gold without having to keep the money in Chinese assets or turn it into US dollars, according to Bloomberg.

In essence, the new parameter will allow exporters, such as Russia, Iran or Venezuela, to avoid US sanctions by exchanging oil in gold-convertible yuan, thus denying the hegemony of petrodollar.

On Monday, the negotiation of the new oil futures contracts for September began with the Shanghai International Energy Exchange at 440.20 yuan ($ 69.70) a barrel, reports the Chinese newspaper South China Morning Post. According to reports, around 18,540 lots have been sold and purchased so far.

As reported by Bloomberg, Petro-Yuan is a direct challenge to the domination of the dollar. However, it remains to be seen whether or not it will have an immediate effect.

Shady Shaher, head of the macro strategy at the Dubai Emirates lender NBD PJSC, says it makes sense in the long run to look at the yuan transactions because China is a key market, but it will take years. Bloomberg columnist Gadfly, David Fickling, argues that China has "almost no influence on the oil market needed to make such a coup". On the other hand, paying in yuan for oil could become part of President Xi Jinping's "One Belt". One Road Initiative "to develop links across Eurasia, including the Middle East. Chinese participation in the planned initial public offering of Saudi Arabia could help influence Saudi acceptance on the yuan, which is only used in the 2 % of global payments.

Leading economist, Carl Weinberg, managing director of High Frequency Economics, goes further, foreseeing an important paradigm shift. Weinberg told CNBC last year that China would probably "force" Saudi Arabia to abandon the petrodollar and instead start to exchange oil in the yuan - a move that, according to him, will probably precipitate the rest of the oil market following the example and abandoning the US dollar as the global reserve currency.

At the BRIC summit last year, Russian President Vladimir Putin expressed Russia's support for Petro-Yuan to specifically challenge the "injustice" of the global domination of the US dollar.

"Russia shares the concerns of the BRICS countries for the injustice of the global financial and economic architecture, which does not take into account the growing weight of emerging economies, we are ready to work together with our partners to promote international financial regulation reforms. and to overcome the excessive domination of the limited number of reserve currencies ".

As the respected geopolitical journalist / analyst Pepe Escobar explains: "overcoming the excessive domination of the limited number of reserve currencies" is the most politicized way of affirming what the BRICS have been discussing for years; how to bypass the US dollar, as well as the petrodollar.

"It's more of a turning point for the US As soon as other nations have a real credible alternative to the US dollar, they will be able to unload dollars and switch to the yuan, which can trigger a dollar crisis. there will be inflation from the tariffs, but also from the flood of dollars ", Ann Lee, Adjunct Professor of Economics and Finance at New York University and author of the book" What the US Can Learn From China ", she said.

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