China’s Petroyuan StuntsThe dollar has ruled the roost since 1944 and, brother, it is not going anywhere.
Bill Blunden
Mar 14, 2023
Look carefully and you might just spot a report from this past December about Xi Jinping visiting Saudi Arabia. Among other things, the Chinese premier discussed the feasibility of paying for Saudi crude in yuan. Shortly afterwards the Iraqi government announced it would drop the dollar and settle imports from China via the yuan. Economist Nouriel Roubini believes a "bipolar currency regime" is in the cards. Given the implications for American influence in the region, it might seem odd that these various dispatches received only passing attention from agenda-setters in the press.
Were they being nonchalantly dismissive? Or perhaps this is how media gatekeepers display unease when a rival threatens something that’s near and dear? The answer is likely more of the former tinged with the latter. We have all been warned that a rising giant named China is shaking things up to usher in a new multipolar era. But as Oscar Wilde observed, “the truth is never pure and rarely simple.” To help us guess where global trade and the economies of America and China are actually headed, let’s review the history of the dollar’s primacy on the world stage.
* * *
Common knowledge suggests that China’s GDP is expected to exceed that of the United States in the coming decades, and its military could be on schedule to reach parity sometime before the end of the century. But a lot can happen in that kind of time. Not to mention that the seeds of China’s ruin may be sprouting just over the horizon. For example, the country faces a severe demographic reckoning on behalf of its one-child policy, wildly skewed gender imbalance, and rapid industrialization. According to projections by the United Nations, come 2050, China will have lost around 100 million people. The percentage drop in China’s GDP will be substantial.
China is also acutely reliant on energy and agricultural imports. In 2020 China was the world’s largest importer of crude petroleum with most of it coming from the Middle East. In addition, possessing a fifth of the world’s population, China has less than 10 percent of the world’s arable land. It remains to be seen if the “no limits” partnership with a resource-laden Russia will be capable of filling in the gaps. If not, one wonders what will happen as crucial resources dwindle. China’s “Wolf Warrior” nationalism may not be enough to prevent the Middle Kingdom from fracturing into a handful of regions as it has countless times in the past.
Change is a permanent feature of history. Eventually the dollar will lose its spot. But as things stand now, it is unlikely the dollar’s demise will occur in the immediate future, nor does it seem likely that China will be the agent of that change. China, with its murky single-party political system, creepy social credit scores, and state-owned property framework, remains a dicey bet for outside money. It will only become more so as the Communist Party struggles to prop up the status quo. But having said that, the presence of Chinese officials looking to ink deals in the Middle East is a subtle cue to Americans. It is a reminder that our day in the sun will not last forever.
Source:
https://www.theamericanconservative.com/chinas-petroyuan-stunts/
