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PETROYUAN, CHINA鈥檚 strategy to DEFEAT the DOLLAR - VisualPolitik EN - YouTube
Channel: VisualPolitik EN
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almost 800 years ago Marco Polo visited
Kublai Khan's court the first emperor of
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the yuan Chinese dynasty and grandson of
Genghis Khan himself
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there he founds what was probably the
first fiduciary currency of all time a
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currency that was entirely based on the
government's reputation and the threat
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of a harsh and certain punishment for
those who refuse to use it
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I love China the biggest bank in the
world is from China
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what's going on with China is
unbelievable the largest devaluation in
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two decades you know where they're the
United States headquarters is located in
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this building in Trump Tower I love
China
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because even though in recent centuries
the world of finance has been chiefly
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dominated by the West the pound sterling
in the United States dollar becoming
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hegemonic for more than 200 years we're
forgetting that it was the Chinese back
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in the seventh century who developed one
of the greatest financial innovations in
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history paper money divya china wants to
regain that leadership but of course in
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order to do so they have to do one thing
and that of course is defeat the US
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dollar
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China in the United States have an
almost overwhelming rivalry the
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difference between the two is huge and
of course it favors the North American
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power in practically every field
including the very important financial
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sphere
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yes each ina is the second world power
is the second largest economy and the
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largest exporter in the world in spite
of all of this however its own currency
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the one doesn't really have much
international clout and hold on a sec
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because I can guess what you're probably
thinking
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yep the Chinese yuan has been used more
in recent years due to the Chinese
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economy's huge growth but let's not fool
ourselves we aren't willing to convert
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our savings into you are an in the same
way that many people do with dollars and
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certainly drug traffickers aren't
willing to be paid in briefcases full of
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Chinese currency in other words in
practice the you'ens
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importance at an international level
remains pretty insignificant or at least
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that was until now because folks in this
video we're gonna talk to you about how
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Xi Jinping's government wants to end the
dollars dominance and make the yuan
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reflect the economic weight of the
Chinese giant and you know what this is
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a lot to do with the fact that China has
already surpassed the United States as
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the world's biggest oil importer
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and now you are wondering well yes I'm
in but I mean what does the yuan what's
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got to do with oil well we're gonna get
to that soon but first we need to go
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back in time about 45 years we have to
go to the 1970s maybe you've heard about
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the petro dollar the time has come for a
new economic policy for the United
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States the petro dollar the story of a
pact since the Second World War and the
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Bretton Woods agreements of 1944 the
dollar has been the reference currency
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the leading world currency if you are
indeed the dollar is by far the most
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commonly used in the international
currency market indeed two-thirds of all
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of the world's central bank's reserves
are in dollars and almost 40% of all
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debt issued globally is in US dollars in
other words nowadays the dollar is like
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the oxygen of the global economic system
any country will have a very hard time
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moving forward if they can't get some
dollars however there was a period in
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history where this ecosystem almost
collapsed
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this'll happens on August the 15th 1971
when Richard Nixon announced the ends of
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the dollars convertibility I have
directed the Secretary of the Treasury
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to take the action necessary to defend
the dollar against the speculation I
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have directed secretary Connolly to
suspend temporarily the convertibility
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of the dollar into gold or other reserve
assets except in amounts and conditions
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determined to be in the interest of
monetary stability and in the best
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interest of the United States before
then the dollar was a convertible
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currency that is the different central
banks could convert it into gold this
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means you could tell the Federal Reserve
Area dollars now give me the equivalent
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value in gold the problem was that the
Korean War the Vietnam War and numerous
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public spending plans were adding up so
the Federal Reserve issued many more
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dollars than they had goals to back it
up
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but with Nixon's decision all of this
ended and the dollar became a fully
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fiduciary currency
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well the thing is that this decision
which was announced as a temporary
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measure and then became permanent risked
the people's faith in the dollar up
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until then the dollar had been the
benchmark currency but from then on why
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would anyone accept some paper that the
Federal Reserve could simply printer
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will the French president himself
General Charles de Gaulle had already
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stated his concern in 1965 even before
the dollars convertibility was abolished
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check this out the fact that many
countries accept as a principle dollars
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as good as gold leads Americans to get
into debt and to get into debt for free
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at the expense of other countries
because what the u.s. owes them it is
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paid at least in part with dollars they
are the only ones allowed to omit
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Charles Dougal but folks faced with the
risk that the global monetary system
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could collapse if the dollar was the
reference currency the United States
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found a formula to save and consolidate
the dollars hegemony of course during
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about petrodollars
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you see in 1974 the United States and
Saudi Arabia they agreed that all oil
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purchases would be done in US dollars
and not only that the reserves of the
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money generated would be channelled
through the North American financial
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system which of course is run with
dollars and this this is how the petro
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dollar was born a year later 1975 the
other OPEC countries joined in and dear
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viewer we're talking about the oil
market it's the largest commodity market
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in the world
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in other words Saudi Arabia essentially
came to the dollars rescue which of
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course they didn't do for free Saudi
Arabia's ruling family wanted nothing
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less than absolute protection from the
United States something like a
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comprehensive insurance plan bit of a
spoiler alert if they absolutely got
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that you probably knew that the Saudi
led operations are fully US backed
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trying to bring stability to Yemen but
the US has its own fight
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as we told you here before a visual
politic in exchange for receiving every
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kind of protection from the North
American military first Saudi Arabia and
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then the other OPEC countries promised
to flood the United States with money
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and cheap oil
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but I know I'm sure that at this point
some of you might be wondering well what
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good does this do for the United States
well the dollar is in such huge demand
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as the worldwide reference currency for
trade savings and investments that it
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has allowed the United States for
example to print money to finance the
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government's without generating
inflation or affecting their economic
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stability
and not only that the dollars present
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throughout the world has also favored
the United States as they've been able
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to create more developed financial
markets they've been able to have more
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buyers for their debt securities and
they've been able to secure the current
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importance of Wall Street but we talk
extensively about all of that in another
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video I'm going to link to that in the
description below the point is that now
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the Chinese the world's biggest oil
importers want to flip around this
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established order the petrol one
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a visual politic we already talked to
lots about the New Silk Road well we
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could say that this is another of the
great products which the Chinese
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government is currently working on
pretty intensively see in June of 2017
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Beijing took the first step when it
agreed with Russia that oil purchases
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could be made in you want thus was born
what is known as the petrol yuan this is
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a form of sale that is now being used in
many of the oil deals that China makes
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with Russia Iran Angola and Venezuela
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however the truth is that countries
haven't been eager to accept this
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currency why is this well that's because
it's considered a liquid rather risky
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highly volatile and not exactly a
reliable currency well to overcome this
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reluctance in March 2018 China announced
a new twist oil futures contracts they
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were launched on the Shanghai
International Energy exchange under a
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yuan denomination but first a quick note
a futures contract is an agreement that
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forces the contracting parties to buy or
sell an assets in this case oil for a
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fixed price that is agreed on today
despite the fact that the delivery of
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said asset of the oil in this case will
be made in the future this is our
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companies and governments can organize
themselves and know how much oil they'll
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be able to buy at a predetermined price
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but that's not all to reassure sellers
China announced that the yuan
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denominated futures would be backed by
gold in other words the country that
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sells the oil will be able to exchange
the yuan it receives for gold whenever
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it wants to this this is a pretty
attractive deal than you think
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this is another detail the countries
that charge in yuan can also escape the
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US sanctions the pace of expansion has
been explosive the shanghai contract has
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become an unexpected thorn in the side
of the main Western benchmarks Steven
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Ennis head of asia-pacific trading at
futures brokerage Oh Wanda in Singapore
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obviously there's still a long way to go
before it can catch up with Western
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markets but so far reception seems to
have been well rather good
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so with this new framework in place do
you know what China is doing exactly
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it's pressuring their suppliers to
accept charging for oil in yuan oh and
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if you don't want to accept that you're
on wells I'm worried about it I'm just
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gonna buy less oil from you no problemo
in fact this explains exactly why China
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has prioritized countries such as Russia
and Angola as its oil suppliers in
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recent years
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but that's not all China knows that
Saudi Arabia could play a major role in
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this entire process if this country even
partially accepted the yuan the entire
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global monetary order would totally
change news stories like these that have
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longer just about energy security but
about financial and political strategies
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check this out
Saudi Aramco agrees to Chinese JV deal
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for ten billion dollar refinery could he
imagine if the Saudi oil that Aramco is
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going to supply to this new refinery was
paid in yuan this folks is the move with
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which Beijing wants to end the dollars
importance or at least weaken it
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China is buy more and more oil each time
than they're paying for a great part of
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it in yuan and this has many many
implications for example China's oil
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suppliers will have more accounts and
reserves in yuan with which they won't
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only buy Chinese technology and products
but the surplus will be heavily invested
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in China itself and government debt in
the real estate sector in stocks when
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they are released etc etc in other words
China wants to have all of the benefit
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that the United States has enjoys in
recent decades China wants the petrol
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you want to contribute decisively to its
national development strategy far beyond
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the export sector
all the while pressuring their main
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rival
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now hold on just a moment because China
will have to introduce many reforms to
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achieve these objectives not only will
they have to give more freedom to
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foreign investors they'll also have to
give them more legal security because
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let's be honest if you have to save
money right now you're probably not
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gonna be doing it in a Chinese bank but
well that is a topic for another video
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so I really hope you enjoyed this video
please do hit that like button if you
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Media podcast they provided the vocals
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always I'll see you in the next video
the time has come for a new economic
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policy for the United States you know
we're there the United States it borders
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is located in this building in Trump
Tower I love China
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