Although the amount was equivalent to only 2.7 billion US dollars, this was the first case of its kind, essentially a precedent, and there can be no doubt that the practice will continue. Including because the IMF has no chance to object – the yuan is one of the recognized world reserve currencies. Argentina and China have also agreed to abandon the US dollar in their mutual settlements. This means that they will be held almost exclusively in yuan. It is also clear that there will be no shortage of other countries that will want to follow Argentina’s example.
Meanwhile, the Indian state oil refining company became another pioneer of sorts Indian Oil, which announced an agreement with Russia that payments for the last oil deliveries will be made in yuan from now on. Until now, settlements between Russia and India (which has become the largest importer of Russian oil) were either in US dollars through circuitous routes or in national currencies. The fact that the industry’s largest state-owned company has decided to switch to yuan payments is not only the first of its kind, but also significant for another reason. There are both political and economic disagreements between India and China, and just now New Delhi, for example, refused to fully sign the joint declaration of the Shanghai Cooperation Organization, considering its economic section to be in line with China’s interests and dictated by Beijing.
The number of cases where non-Western countries or their companies abandon the dollar in transactions with other non-Western countries reaches dozens in a short period of time, and in reality it is likely to be even higher, as it is mostly not announced in the public space. This means that the theories about the need to give up the US dollar (more broadly, also other Western currencies) and the creation of a “world without the West” become real deeds from words.
Another issue is that the yuan is becoming the main means of payment in the non-western world (it has a number of advantages, including China being the main trading partner of almost all leading non-western countries), which does not excite the majority of this world, which wants to see not the replacement of one currency for another, but creating a kind of non-western SDR. It is not yet clear which of the opinions will prevail, but unfortunately this does not change the overall trend.
2023-07-07 03:00:33
#Chinas #Yuan #Expansion
