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HomeNewsVideo: The war of the dollar and the Chinese yuan is raging

Video: The war of the dollar and the Chinese yuan is raging


Since the imposition of US economic sanctions on Russia because of the war on Ukraine, countries around the world are moving away from the dollar little by little. China is establishing its next system, and the Saudi decision will be very important, and its impact will be “catastrophic” on the American economy, according to an American official.

The recent Sino-Brazilian agreement highlights the issue of a group of countries abandoning the US dollar in bilateral trade relations, and using the two countries’ local currencies.

This is no longer just a phenomenon or an exceptional event, as there is a clear effort by Beijing and other countries to abandon the dollar (Dedollarisation), which poses a major challenge to the US economy.

The recent agreement with Brazil will allow China, the biggest rival to US economic hegemony, and Brazil, the largest economy in Latin America, to conduct their massive trade deals directly and exchange the Chinese yuan for the Brazilian real and vice versa, that is, using the yuan, instead of relying on the dollar.

political and economic endeavour

The US economic sanctions imposed on Russia since the start of the Russian-Ukrainian war in February 2022 have led many countries to consider reducing dependence on the US currency.

At the beginning of the war, as everyone remembers, Russia forced the countries it called “unfriendly” to pay its energy dues in terms of gas and oil in Russian rubles. At other times, it seemed that there was a consensus between Moscow and its other trading partners to eliminate the dollar from commercial exchanges, in whole or in part.

This is what happened in the case of India, which currently deals with Russia in rupees and roubles, and which struck a big deal with the Kremlin on Wednesday, for a significant increase in oil trade.

Russia also recently announced that it will completely abandon the dollar in its international trade exchanges, not only in terms of bilateral trade exchanges, and will replace the dollar with the Chinese yuan.

And according to Bloomberg, at least 12 countries in South America have begun experimenting with abandoning the dollar.

Spark coup against the dollar?

Last January, Saudi Arabia, the world’s largest oil producer, said it was open to the idea of ​​trading in currencies other than the US dollar, and was in negotiations with China to replace the dollar with the yuan.

There is also news about the possibility of establishing a Chinese-Saudi-Russian-Iranian economic alliance, and about the possibility of Tehran and Riyadh joining the BRICS group, which currently includes five members.

China has also abandoned dealings in dollars with Russia, Pakistan and several other countries.

Countries such as Bangladesh, Kazakhstan and Laos intensified their negotiations with China to promote the use of the Chinese yuan in commercial transactions, and India began a few months ago to secure a bilateral payment mechanism with the United Arab Emirates in Indian rupees.

The main driver of these plans is Western sanctions against Moscow and the move by the United States and Europe to isolate Russia from the global financial messaging system known as SWIFT in the aftermath of the war in Ukraine, which has raised fears that the dollar will permanently become an overt political tool.

The US decision to use its currency as a political and economic weapon has also increased pressure on the economies of Asian countries that do not have an alternative payment system, which will expose those countries or others to the risk of being forced to comply with any possible US sanctions and lead to their loss of trade with international partners.

How will this affect the United States?

When Xi Jinping visited Moscow earlier this month and met Putin, a short video of him saying goodbye to Putin was leaked. Within a few seconds, Xi said to the Kremlin master, whom he always calls his “close friend,” “The world is changing like it hasn’t happened in 100 years, and we (ie Beijing and Moscow) are leading this change.”

Although the Kremlin did not comment on what Xi said, media reported that what he said was not supposed to be filmed and leaked. However, experts believe that the act was intended to send political messages.

For their part, the Americans see the Chinese endeavor to place the yuan on the international scene as an alternative to the dollar as a major threat. Monica Crowley, a former assistant to the US Treasury Secretary, says that emerging economies abandoning the dollar “would be disastrous for the US economy.”

Crowley adds that the dollar was the safest currency since World War II, and it was supported by three things:

  • Gold (which former President Richard Nixon gave up)
  • Strong US economy
  • All oil exchanges were in dollars

It seems that Saudi Arabia plays a decisive role for Crowley, who believes that if these exchanges end in dollars, then this means the end of the era of the US dollar.

In order to be accurate, it must be recalled that Crowley is close to the Republicans and that she was appointed to her previous position in the Treasury Department by Donald Trump, and that she worked for a long time on Fox News opposing the current President, Joe Biden.

Crowley criticizes the financial economic policy of the United States, as the United States printed “dollars in a crazy way,” and says that the country is currently facing an economic storm, fueled by the conflict in Ukraine, energy prices, and the new bloc that China is establishing little by little.

Crowley adds that if Saudi Arabia agreed to abandon the dollar in oil trade, the United States would witness a “sharp rise in inflation,” adding, “If you think inflation is bad today, you just have to wait and see.”

Merry C. Vega is a highly respected and accomplished news author. She began her career as a journalist, covering local news for a small-town newspaper. She quickly gained a reputation for her thorough reporting and ability to uncover the truth.

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