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Cannot overstate how big a deal this is. The death of the petrodollar and the status of USD as the world reserve currency is happening before our eyes. This will have a profound impact on the United States' ability to project power, raise funds for things like military spending, and drastically reduce the effect of American sanctions. If China pulls this off it would be an absolutely huge win for the CPC. The reason China is doing this now is because they have a lot of reserves in USD and don't want the United States to lock them up like they did Russia in the event of a conflict. They're taking proactive steps now to dedollarise the Chinese economy to minimize the negative effects of US sanctions.

  • thethirdgracchi [he/him, they/them]
    ·
    3 years ago

    Saudi Arabia is in active talks with Beijing to price its some of its oil sales to China in yuan, people familiar with the matter said, a move that would dent the U.S. dollar’s dominance of the global petroleum market and mark another shift by the world’s top crude exporter toward Asia.

    For China, using dollars has become a hazard highlighted by U.S. sanctions on Iran over its nuclear program and on Russia in response to the Ukraine invasion.

    The Saudi move could chip away at the supremacy of the U.S. dollar in the international financial system, which Washington has relied on for decades to print Treasury bills it uses to finance its budget deficit. “The oil market, and by extension the entire global commodities market, is the insurance policy of the status of the dollar as reserve currency,” said economist Gal Luft, co-director of the Washington-based Institute for the Analysis of Global Security who co-wrote a book about de-dollarization. “If that block is taken out of the wall, the wall will begin to collapse.”