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Javier Blas: The myth of the inevitable rise of the petroyuan
The prediction drawn by this commentary may be accurate but the commentary is ridiculous for scorning China for commodity market manipulation as if the U.S. government hasn't been doing the same thing for much longer. That's a subject the writer's news organization dares not touch and a failure that makes this commentary largely propaganda.
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By Javier Blas
Bloomberg News
via The Washington Post
Monday, February 27, 2023
In diplomacy, what's left unsaid often matters more than what's said. After Chinese President Xi Jinping met the king of Saudi Arabia in December, both nations issued lengthy readouts extolling the burgeoning Saudi-Sino relationship in "all fields." But in more than 5,000 words, the statements were silent on the much-hyped idea of using the yuan to price oil.
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The communiques said nothing at all about it. Zero. zilch. Nada.
The inevitability of a petroyuan has become a popular take in the financial blogosphere: China flexing its muscles as an emerging power, elbowing one of the most visible and enduring signs of the 75-year U.S. hegemony in the Middle East.
If you believe in conspiracy theories, the introduction of a petroyuan, and the ensuing collapse of the petrodollar, would be a first domino, potentially weakening the whole U.S. financial system. Very serious stuff. A redrawing of the global economic map. The backdrop to crisis and wars.
Astonishing as it is, the narrative is an illusion.
Ask quietly in government circles in Riyadh, Abu Dhabi, Kuwait City, or Doha about the petroyuan, and the response -- even in the weeks following Xi's visit to Riyadh -- is unanimous: The petrodollar is here to stay.
On a recent trip to the region I didn't hear a single official talking seriously about making preparations to introduce a new currency to the mix.
The answers sound a lot like this: What's in it for us? The greenback is freely convertible, the yuan isn't; the dollar is liquid, the yuan isn't. That's the polite version; the more candid answers sounded even more emphatic about the absurdity of turning to a managed currency produced by an opaque and unpredictable financial machine. ...
The appetite among OPEC producers to price oil in yuan using a Chinese exchange is almost nil. Middle Eastern national oil companies closely watch how Beijing tries to manipulate local commodity prices such as iron ore, cotton, coal, or grains every time prices rise above its pain threshold. Having spent 60 years building a formidable cartel, why would Middle East nations cede pricing power to China? ...
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