2018: The Emergence of the Petroyuan

Source:     The Asia-Pacific Journal | Japan Focus
Volume 16 | Issue 22 | Number 3 | Nov 10, 2018
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China: The Emergence of the Petroyuan and the Challenge to US Dollar Hegemony

John A. Mathews and Mark Selden

"... This article analyzes the significance of the Chinese oil futures contract initiative, creating what is widely known as the “petroyuan”, and sets it in the framework of the broader internationalization of the yuan. It is important not to overstate the significance of this event, as the institutions supporting the US dollar as global currency are still powerful and dominant. China’s prospects have also been dented by the aggressive trade tactics launched by the Trump administration, with a clear focus on China as principal target. The issue is complicated by the re-imposition of US sanctions against Iran, and specifically against Irani oil exports to China (as discussed below). But there is a case to be made for the strategic significance of this Chinese intervention in the commodity markets. Just as the current US financial and industrial hegemony is grounded in the dollar’s exclusivity as vehicle for global oil trading, so the decisive intervention by the Chinese to create a credible alternative in oil could well have the effect of ushering in a new, multipolar world of trade, finance and industry. ..."

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