PetroChina Completes First International Crude Oil Trade In Digital Yuan (coindesk.com) 53
An anonymous reader quotes a report from CoinDesk: Chinese oil and gas company PetroChina (0857) has completed the first international crude oil trade using the country's central bank digital currency (CBDC), the e-CNY, China Daily reported on Saturday. PetroChina bought 1 million barrels of crude oil settled in e-CNY, or digital yuan, at the Shanghai Petroleum and Natural Gas Exchange (SHPGX) on Oct. 18, according to the report by the Chinese Communist Party-owned newspaper. The SHPGX did not disclose the exact value of the deal nor the seller's identity.
China's government may wish to use the e-CNY as a tool for expanding the international use of its currency, also known as the renminbi, so using it to settle purchases of major global commodities like crude oil would be one way to underpin this expansion. While almost all the world's major economies are at least looking at developing a CBDC, China's is comfortably among the most advanced. Transactions using the currency hit 1.8 trillion yuan ($250 billion) as of the end of June, with e-CNY accounting for 0.16% of the cash in circulation.
China's government may wish to use the e-CNY as a tool for expanding the international use of its currency, also known as the renminbi, so using it to settle purchases of major global commodities like crude oil would be one way to underpin this expansion. While almost all the world's major economies are at least looking at developing a CBDC, China's is comfortably among the most advanced. Transactions using the currency hit 1.8 trillion yuan ($250 billion) as of the end of June, with e-CNY accounting for 0.16% of the cash in circulation.
suspicious (Score:3)
no counter-party revealed. Probably a set-up to promote their cryptocurrency, TofuDregCoin.
Re:suspicious (Score:4, Insightful)
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One of the linked articles mentions unrelated South American countries, Brazil and Argentina.
Connecting the dots... Who has oil reserves on that continent and a testy relationship with the US? Venezuela.
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Connecting the dots... Who has oil reserves on that continent and a testy relationship with the US?
Russia.
Venezuela.
Oh, by "that continent" you mean South America, not Asia where China is located. Venezuela certainly qualifies as a nation that could be willing to trade petroleum crude for some alternative to the USD.
Looking at the list of major petroleum exporters and there's perhaps at least a dozen nations that could be willing to trade petroleum for some new Chinese currency. https://en.wikipedia.org/wiki/... [wikipedia.org]
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Venezuela.
Oh, by "that continent" you mean South America, not Asia where China is located. Venezuela certainly qualifies as a nation that could be willing to trade petroleum crude for some alternative to the USD.
Looking at the list of major petroleum exporters and there's perhaps at least a dozen nations that could be willing to trade petroleum for some new Chinese currency. https://en.wikipedia.org/wiki/... [wikipedia.org]
Actually, is even worse. We (I am Venezuelan) have a very large debt with the chinese (chinese development f
Chinese yuan doesn't really float (Score:5, Informative)
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Not sure why anyone outside of China would want to invest in anything backed by Chinese yuan other than as an attempt to dilute the global influence of USD.
I don't really know, and certainly am no expert, but I think it probably should be considered that China does a lot of manufacturing and trade, and putting it in context, any oil rich country, is probably quite happy to skip currency conversion by having to deal with the petrodollar, and just get stuff that they'll be importing from China, anyway. In this context, it probably makes a lot of sense, given the risks, and control that the US maintains on international trade.
If anything, this is something which
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If anything, this is something which will work to make China more difficult to sanction in the future, which may similarly be in the interests of the countries selling China oil.
They might think so, but making China more powerful at the expense of the US is just creating an even less benevolent master. The US has been a bad actors in many ways and there's no denying that, but what makes anyone imagine they'd rather have China in charge?
Re: Chinese yuan doesn't really float (Score:2)
Riiiiight, the orange clown wasn't embarrassing but Joe is? Snicker.
Re: Chinese yuan doesn't really float (Score:1)
Re:Chinese yuan doesn't really float (Score:4, Insightful)
I don't really know, and certainly am no expert, but I think it probably should be considered that China does a lot of manufacturing and trade, and putting it in context, any oil rich country, is probably quite happy to skip currency conversion by having to deal with the petrodollar, and just get stuff that they'll be importing from China, anyway.
What does China export that someone would be willing to risk the value of one million barrels of crude petroleum in the trade? China is desperate for imports of food, fertilizer, fuel, and so many other commodities that they'd be unlikely to export them at any significant volume, or at some price that is somehow a great deal that it would be foolish to walk away from. China has put limits on many of their more valued exports like rare earth metals so there's a risk of China putting limits on exports in the future on whatever else China may have exported in abundance in the past. China has been under trade embargoes so they have a shortage of things like computer chips so the quality of cell phones, cars, and so much else is likely poor.
Unless there's something specific given as an example on what China offers then I have my doubts on what China could be trading that is of such value that the entity doing this trade would prefer payment in Chinese currency, especially something as new and untested as a digital currency, over the global standard of the US dollar.
I get it that China and many of their trade partners would like to distance themselves from the US dollar but there are reasons that so much international trade is done in USD over other available currencies. One reason is that the USA is a third disinterested party. If two countries do trade in the currency of either nation then the nation that controls the value of that currency has not only the motive to influence the value of that currency but a large lever with which to move that value. This ability to change the value could be so high as to render it worthless. Get a third party currency, especially one that has no real interest in providing advantage to either party, and that makes that currency more valuable to both parties in this transaction. The larger matter is that both agree on the value of the currency, and that it will continue to hold value with only modest changes in that value over time. Maybe one nation can give some high level of assurance that their currency isn't going to be devalued quickly, but I doubt that nation is China with some newly constructed digital currency.
If China has some valued commodity to trade for crude petroleum then why not use that commodity as the currency? This is hardly a new idea since people have been trading with silver and gold as currency for a very long time. Instead of ounces of silver or gold the trade could be in ounces (or grams, or tons) of lithium, cobalt, or scandium.
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They could be acting as a pass through for Russia. Since the price for Russian oil is now capped in Europe below market value, Russia could, theoretically, ship its oil through China and get a better price even if it meant China taking a cut. Using China's digital yuan would be a decent way of hiding the transactions.
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I get it that China and many of their trade partners would like to distance themselves from the US dollar but there are reasons that so much international trade is done in USD over other available currencies. One reason is that the USA is a third disinterested party. If two countries do trade in the currency of either nation then the nation that controls the value of that currency has not only the motive to influence the value of that currency but a large lever with which to move that value. This ability to change the value could be so high as to render it worthless. Get a third party currency, especially one that has no real interest in providing advantage to either party, and that makes that currency more valuable to both parties in this transaction. The larger matter is that both agree on the value of the currency, and that it will continue to hold value with only modest changes in that value over time. Maybe one nation can give some high level of assurance that their currency isn't going to be devalued quickly, but I doubt that nation is China with some newly constructed digital currency.
I think this is the part which is the clincher. The US is not a disinterested party, and its strategic intentions with China are very clear, especially when the USA is doing everything it can to maintain alliances in Asia, to encircle and mount a capable naval blockade around China, so maintaining that the USA is disinterested in China's trade, well, I'm sorry but it's just wrong. In this context, nothing is necessarily being done because it's beneficial in pure business terms, but there's also national str
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https://www.statista.com/topic... [statista.com]
This is not a "meh" moment.
Re:Chinese yuan doesn't really float (Score:4, Insightful)
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But this isn't BRICS making the trade, or even China making the trade. This is from a company in China called PetroChina. The actions of this one company doesn't reflect on the entire population of BRICS any more than me buying gasoline from the corner filling station reflects on the entire population of North and South America.
This is one million barrels of crude out of nearly 100 million barrels of crude trade per day. https://www.worldometers.info/... [worldometers.info]
If transactions like this were happening daily then
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The Chinese yuan isn't really a free floating currency like the USD.
And why would anyone *like* to trade using a currency that floats? One that can turn a profitable deal into a huge loss when the exchange rate goes up or down 10-20% by the time you pay/receive the full payment? Why?
It is much better to trade using a currency that is (1) stable, and (2) you can use to buy stuff you want if you are receiving the currency, or you have stuff you can sell to get the currency if you are on paying side. China being the factory of the world and major importer of a lot of time,
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It is much better to trade using a currency that is (1) stable
Naturally stable, as in its actual, steady value in the free market -- absolutely. "Stable" as in artificially fixed by the Chinese Communist Party, regardless of real-world market events or economic conditions -- definitely not.
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And why would anyone *like* to trade using a currency that floats?
Perhaps because the alternative is a currency that sinks.
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And why would anyone *like* to trade using a currency that floats?
Perhaps because the alternative is a currency that sinks.
Which would work out great if you are on the paying side, wouldn't it? Didn't we keep hearing that China is going to collapse soon? So why not buy stuff using the Yuan so you only need to pay a dime on a dollar when it comes to paying the bill?
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Not sure why anyone outside of China would want to invest in anything backed by Chinese yuan
No one is investing in Chinese Yuan, the proposal here is to trade in Yuan. The rest is the bank's problem.
Also what you're saying actively goes against your conclusion. A tightly controlled artificially stabilised currency is precisely what you do want as an investment. The question is if that control has sufficient backing for long-term stability (be that quantitative easing, or the rates controls of the USA, or whatever the heck China does). The only concern I have is will my ${thing} be worth as much to
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A tightly controlled artificially stabilised currency is precisely what you do want as an investment.
It's definitely not what I want. I want to use a currency subjected to and tested by the full force of the free market, which makes it a hell of a lot harder to manipulate, and is what gives the currency its intrinsic value. And I absolutely never want a regime fixing a currency for their own selfish reasons, especially not one with the CCP's track record of controlling and abusing pretty much everythin
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I want to use a currency subjected to and tested by the full force of the free market
Then use bitcoin, free from any and all manipulation that isn't free market. What's it worth tomorrow? Fuck knows. If that's the kind of gambling you want to do during normal trade then more power to you, just don't ever come and ask me for a job because I reserve that high level of risk for investments, not for trade.
There's a reason the world migrated away from currencies subjected to free market economies and moved to centrally controlled fiat currencies. The former's volatility made it unattractive to p
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The Hong Kong Dollar is at a fixed exchange rate to the US Dollar, and people are willing to invest in it. Same for the Arab Emirate Dirham.
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China's attempt to stabilize the value and exchange rates of its currency should make it *more* attractive for denominating contracts in. If you want someone to agree to accept a million yuan as payment in five years, those people will want to know that the yuan will be worth something. All central banks manage the value of their currency to maintain modest inflation and do in certain cirumstances [stlouisfed.org] intervene in foreign exchange rates, even if they don't routinely do so.
The problem with China's ambitions to
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Oh it's even worse than that. China's currency has export controls on
middle finger at the US (Score:5, Interesting)
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Since we manufacture nothing,
wat
costs for most goods would explode overnight.
If the dollar were dropped overnight, then that would be true. But it won't happen all at once because of the scale involved. It wouldn't be a picnic, that's for sure, but it's unlikely the crash would be as rapid.
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Course it's a "what" moment because it's a provable lie that the anti-US crowd keep telling each other. Plus BRIC is just swapping one master for another. It's no revolution in the world being a better place and has downsides. [cambridge.org]
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And yet the US hasn't decreased manufacturing over that same time scale, just done more automation.
Which is how the whole world is going.-
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Watch the famous 30 second clip from the debate between Bill Clinton, George Bush Sr & Ross Perot debating NAFTA: https://www.youtube.com/watch?... [youtube.com]
NAFTA was the biggest stab in the back of the working American since the Taft Hartley Ac
Re: middle finger at the US (Score:2)
Nothing you said contradicted what I said even slightly.
Reading comprehension, it's not just for elementary school placement tests
Re:middle finger at the US (Score:4, Insightful)
The US is the second largest manufacturer in the world, with China being first. The US is ahead of such nations like Germany and Japan for manufacturing.
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Aside from the fact the USA actually does a significant amount of manufacture and export which stabilises its currency, your explosion fantasy won't ever actually happen. One trade being done in one currency doesn't remotely challenge the $5 TRILLION / DAY of the US reserve currency trading.
This isn't the first non-USD oil trade. Several countries have traded in Euros and no one cared. Several countries are trading in Rubbles thanks to the EU sanctions, and ... well the EU cares but it's not affected any of
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When the world dropped the pound sterling as the reserve currency in the 1950's, it caused an immediate crash in the British economy and contraction of the empire. The resulting recession in the UK lasted 40+ years.
I'm pretty sure it was the aftermath of WW2 that left the world looking for an alternative to the British pound as the global reserve currency.
https://en.wikipedia.org/wiki/... [wikipedia.org]
The United Kingdom's pound sterling was the primary reserve currency of much of the world in the 19th century and first half of the 20th century.[1] That status ended when the UK almost bankrupted itself fighting World War I[31] and World War II[32] and its place was taken by the United States dollar.
In the 1950s, 55% of global reserves were still held in sterling; but the share was 10% lower within 20 years.[1][33]
The establishment of the U.S. Federal Reserve System in 1913 and the economic vacuum following the World Wars facilitated the emergence of the United States as an economic superpower.[34]
As of 30 September 2021, the pound sterling represented the fourth largest proportion (by USD equivalent value) of foreign currency reserves and 4.78% of those reserves.[35]
With much of Europe and Asia left in rubble after a brutal six year war, and that war could be considered to have lasted decades if we include WW1 and a handful of Asian conflicts that lead up to WW2, there wasn't much in real value backing up any currency at the end of the war. With some level of global peace restored (and that was
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This is a big deal because China has tricked one of its trading partners into accepting their magic beans for a significant amount of oil. There is almost certainly a good reason why the other party doesn't want to be named. They are only willing to accept this deal because they are under significant international scrutiny.
Here's the problem with trading with a currency that isn't USD. When Russian invaded Ukraine and came under U.S. sanctions, India offered to exchange Russian oil for rupees. Russia thou
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I mean China got where they were by lying. No one has actually done anything about it except throw up their hands and continue to deal. Of course China is also the country that if you accuse them of anything they start a stealth infiltration of your country.
Did everyone forget about the illegal "police stations" China set up to punish their citizens in this country?
The best thing to do is consider China an aggressor, break off all trade, all relations, and only talk to them through the use of nuclear weapon
The Beginning of the End (Score:2)
If they're doing oil trades in China's digital currency then it's over for the US. Unless China does something that amounts to having given them worthless bits and winds up just stealing all the oil...the oil producers will likely flock over as the US loses it's clout and popularity with the rest of the world.
US supremecy is over. The country's capitalistic background is what will lead to it's demise. We used the slave labor in the backyard while being dumb enough to believe the slave drivers were good peop
US did this to itself (Score:2)
A lot of both 'good' and 'bad' countries don't like this power.
Good 'ol Supply and Demand (Score:2)
If a couple of trillion US dollars each year that currently float around the world trading oil suddenly become homeless, you'll have a surplus of US currency. And we all now what happens to the value of something for which there is a surplus... This is a dodgy situation for the American government. Those dollars will come home, and will be used by foreign people and organizations to purchase things. Important things.
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