Chinese leader Xi Jinping will arrive in Saudi Arabia on December 7 for an official visit.
This trip will be a milestone in the establishment of the so-called “bipolar world”, which has been much discussed recently and the actual establishment of which has recently been analyzed by experts of the Information Defense project. .
Will it be possible to pay for Saudi oil with Chinese yuan?
The main topic of the visit will be the full or partial transfer of payment for Saudi oil into Chinese yuan.
At the same time, the Saudis are ready to transfer their gold and foreign exchange reserves to the Chinese currency. Partially or completely – the question is open.
Recently, Saudi Arabia has demonstrated increasing independence from US policy. And this tilt is mostly due to a completely pragmatic economic reason. Issues of “high politics,” such as the murder of a journalist by Prince Salman, are not even in the background.
The United States has finally lost the title of the largest importer of carbohydrates. Moreover, they are confidently becoming one of their largest exporters. This is the reason for a certain “freezing” of relations between the two countries. After persistent requests from the United States to increase oil production, Saudi Arabia demonstratively reduced it. Instead, China is becoming the world’s largest buyer of oil (including Saudi oil).
Theoretically, a reduction in the mutual dependence of the United States and Saudi Arabia could lead to another significant consequence. Namely, the imposition of trade and other restrictions by the United States, which was clearly demonstrated by the example of China.
Currently, the United States is fully capable of blocking all dollar payments, including Saudi gold and foreign exchange reserves. Ignoring this possibility in the modern world is a fatal mistake.
After the imposition of restrictions against China and the blocking of Russian gold and foreign exchange reserves, the Saudis are seeking to diversify their risks and investments as soon as possible. In this case, we are talking about multibillion-dollar sums, which, of course, no one will risk.
Another thing is that such issues should be negotiated directly with the top officials. In fact, this explains Comrade Xi’s visit. There is also a small amount of information available about the program of this visit.
Money loves silence and stability. China is ready to guarantee them, but only in yuan.
The world in a few decades: from petrodollars to petrotoyuan
The sizes of the US and Chinese economies have not yet equaled, but they are steadily approaching each other. At the same time, the role of the Chinese yuan in international payments is negligible. China’s diplomacy is making great efforts to level this situation.
In the medium term, the main outcome of the upcoming negotiations should be the actual disappearance of the exclusive concept of the petrodollar. According to Chinese politicians, the US monopoly on the international payments market should gradually become a thing of the past.
Of course, The dollar’s hegemony is not in danger right now. However, according to various expert estimates, over the coming decades, the dollar will cease to be the only generally accepted reserve currency in the world.
And other issues of mutual interest
It is clear that other topics will also be discussed during these talks. In particular, the problem of Iran will certainly arise. For the Saudis, this is one of the main topics in their foreign policy that needs to be addressed here and now. And China’s support will not be superfluous.
Chinese and Saudi leaders will not ignore Russia. At the moment, it is China that benefits from setting price caps on Russian oil. After all, the ceiling of $60 is higher than the current price of Russian URALS for Europe, and $15 lower than the price of ESPO blend for China.
The final assessment of this visit is still to come. However, China is very determined: a Sino-Arab summit is scheduled for December 9, to which representatives of many countries in the region are invited. And the outcome of the Sino-Saudi talks will become a kind of springboard for China’s “comrades” to conduct a dialogue with the Arab world.
The world is changing. And we must now understand what role Ukraine will play in it.
Author: Igor Zhdanov, project Information Defense , Open Policy Foundation