Last week, I wrote to you about China’s recent efforts to challenge the U.S. dollar’s reserve currency status. (If you missed it, you can read my two-part series here and here.)
This strategy revolves around oil.
Over 90% of global oil sales are priced in U.S. dollars. Hence the term “petrodollars.” This serves as a crucial support for the dollar’s reserve currency status.
But China is angling to offer its oil for sale in its own currency, the yuan. This has coined the term “petroyuan.” (You can catch up here.)
The security of the U.S. dollar features regularly in emails I get from readers. And I have written a lot about it in the past.
Now, as I have said many times, I don’t believe the U.S. dollar’s status as the world’s primary reserve currency is in any immediate danger. Its strength and safe-haven status will keep it in pole position for many years to come.
But the petroyuan story is just part of China’s ongoing campaign to compete with the U.S. as a global superpower…
I recently sent you an excerpt from my 2018 book, Collusion. It was all about China’s efforts over a decade ago to establish its currency, the yuan, on the international stage.
The excerpt focused on China’s strategy to convince the International Monetary Fund (IMF) to include the yuan in its special drawing rights (SDR) basket.
The SDR is made up of weighted currency units from the world’s most powerful economies. That includes the U.S. dollar, the pound sterling, the euro, and the Japanese yen.
This campaign was led by then-governor of the People’s Bank of China (PBOC) Zhou Xiaochuan.
In September 2016, Christine Lagarde, who was head of the IMF at the time, announced that the yuan was to be added to its SDR.
(If you missed it, you can find that excerpt here.)
Again, I’m not saying the Chinese yuan will replace the U.S. dollar, at least not in my lifetime.
But I believe it’s important to understand the nuances involved. As well as the people and the politics.
So today, I’m sharing another excerpt of Collusion with you. It details how China used its growing economic strength to push its agenda and form strategic alliances with those in positions of power around the world.
To read the excerpt, follow this link.
Regards,
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Nomi Prins
Editor, Inside Wall Street with Nomi Prins
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