There has been a drip feed of stories these past twelve months about a movement by Eurasian countries, led by Russia and China, away from US unipolar dominance. It is a trend that anyone who wants to know what is going on the world cannot ignore. Investors who do not profit from it will rue their shortsightedness. Only the US government would be foolish enough to try to stop it. From Tyler Durden at zerohedge.com:
Last week, in “The PetroYuan Is Born: Gazprom Now Settling All Crude Sales To China In Renminbi,” we discussed the intersection of two critically important themes which have far-reaching geopolitical and economic consequences. The first is the death of petrodollar mercantilism, the USD recycling system that has helped to buttress decades of dollar dominance and the second is the idea of yuan hegemony, a new, post-Bretton Woods world economic order characterized by the ascendancy of China-led supranational institutions.
These themes came together recently when it became apparent that Gazprom has begun settling all crude sales to China in yuan. Here’s a summary of the prevailing dynamics: Western economic sanctions on Russia have pushed domestic oil producers to settle crude exports to China in yuan just as Russian oil is rising as a percentage of total Chinese crude imports. Meanwhile, the collapse in crude prices led to the first net outflow of petrodollars from financial markets in 18 years, and if Goldman’s projections prove correct, the net supply of petrodollars could fall by nearly $900 billion over the next three years. All of this comes as China is making a concerted push to settle loans from its newly-created infrastructure funds in renminbi.
Now, it appears Russia and China will de-dollarize natural gas settlements as well.
To continue reading: PetroYuan Proliferation
