Follow The Money: Petro-Yuan & Petro-Dollar

Military exercises, military repositioning, new agreements, and more monetary policy changes…
We are aware of the geopolitical changes and the threat of world war escalating.
This is all being staged for controlling money interests and population control. ~Ron

Iran and China joint naval drill

Chinese and Russian naval vessels seen during a Joint Sea 2014 naval exercise in the East China Sea, outside Shanghai.(China Daily via Reuters)

China and Iran Set to Hold Joint Naval Exercise in Persian Gulf

Chinese warship and destroyer from Gulf of Aden are now in Bandar Abbas for drill

Chinese Destroyer Docks in Iran, First Such Visit
TEHRAN, Iran — Sep 21, 2014 ABC News & AP reported

The PetroYuan Cometh: China Docks Navy Destroyer In Iran’s Strait Of Hormuz Port

21 Sept 2014

Since China fired its first ‘official’ shot across the Petrodollar bow a year ago, there has been an increasing groundswell of de-dollarization across the world’s energy trade (despite Washington’s exclamations of ‘isolated’ non-dollar transactors). The rise of the PetroYuan has not been far from our headlines in the last year, with China increasingly leveraging its rise as an economic power and as the most important incremental market for hydrocarbon exporters, in the Persian Gulf and the former Soviet Union, to circumscribe dollar dominance in global energy – with potentially profound ramifications for America’s strategic position. And now, as AP reports, for the first time in history, China has docked a Navy Destroyer in the Southern Iranian port of Bandar-Abbas – right across the Straits of Hormuz from ‘US stronghold-for-now’ Bahrain and UAE.

The rise of the PetroYuan has not been far from our headlines in the last year:

Guest Post: From PetroDollar To PetroYuan – The Coming Proxy Wars

The Rise Of The Petroyuan And The Slow Erosion Of Dollar Hegemony

And now, as AP reports, for the first time in history, China has docked a Navy Destroyer in a Southern Iranian port of Bandar-Abbas – right across the Straits of Hormuz from ‘US stronghold-for-now’ Bahrain and UAE.

Adm. Hossein Azad, naval base chief in the southern port of Bandar Abbas, said the four-day visit that began Saturday saw the two navies sharing expertise in the field of marine rescue.

“On the last day of their visit while leaving Iran, the Chinese warships will stage a joint drill in line with mutual collaboration, and exchange of marine and technical information particularly in the field of aid and rescue,” said Azad.

The report said the destroyer was accompanied by a logistics ship, and that both were on their way to the Gulf of Aden as a part of an international mission to combat piracy.

Last year a Russian naval group docked in the same port on its way back from a Pacific Ocean mission.

The move is also seen part of off efforts by Iran to strike a balance among foreign navies present in the area near the strategic Strait of Hormuz, the passageway at the mouth of the Persian Gulf through which a fifth of the world’s oil is shipped.

U.S. Navy’s 5th Fleet is based in nearby Bahrain, on the southern coast of the Gulf.

*  *  *

Here’s why it matters…

*  *  *

As we concluded previously,

History and logic caution that current practices are not set in stone. With the rise of the “petroyuan,” movement towards a less dollar-centric currency regime in international energy markets—with potentially serious implications for the dollar’s broader standing—is already underway.

As China has emerged as a major player on the global energy scene, it has also embarked on an extended campaign to internationaliseits currency. A rising share of China’s external trade is being denominated and settled in renminbi; issuance of renminbi-denominated financial instruments is growing. China is pursuing a protracted process of capital account liberalisation essential to full renminbiinternationalisation, and is allowing more exchange rate flexibility for the yuan. The People’s Bank of China (PBOC) now has swap arrangements with over thirty other central banks—meaning that renminbi already effectively functions as a reserve currency.

Chinese policymakers appreciate the “advantages of incumbency” the dollar enjoys; their aim is not for renminbi to replace dollars, but to position the yuan alongside the greenback as a transactional and reserve currency. Besides economic benefits (e.g., lowering Chinese businesses’ foreign exchange costs), Beijing wants—for strategic reasons—to slow further growth of its enormous dollar reserves. China has watched America’s increasing propensity to cut off countries from the U.S. financial system as a foreign policy tool, and worries about Washington trying to leverage it this way; renminbi internationalisation can mitigate such vulnerability. More broadly, Beijing understands the importance of dollar dominance to American power; by chipping away at it, China can contain excessive U.S. unilateralism.

China has long incorporated financial instruments into its efforts to access foreign hydrocarbons. Now Beijing wants major energy producers to accept renminbi as a transactional currency—including to settle Chinese hydrocarbon purchases—and incorporate renminbi in their central bank reserves. Producers have reason to be receptive. China is, for the vastly foreseeable future, the main incremental market for hydrocarbon producers in the Persian Gulf and former Soviet Union. Widespread expectations of long-term yuan appreciation make accumulating renminbi reserves a “no brainer” in terms of portfolio diversification. And, as America is increasingly viewed as a hegemon in relative decline, China is seen as the preeminent rising power. Even for Gulf Arab states long reliant on Washington as their ultimate security guarantor, this makes closer ties to Beijing an imperative strategic hedge. For Russia, deteriorating relations with the United States impel deeper cooperation with China, against what both Moscow and Beijing consider a declining, yet still dangerously flailing and over-reactive, America.

For several years, China has paid for some of its oil imports from Iran with renminbi; in 2012, the PBOC and the UAE Central Bank set upa $5.5 billion currency swap, setting the stage for settling Chinese oil imports from Abu Dhabi in renminbi—an important expansion of petroyuan use in the Persian Gulf. The $400 billion Sino-Russian gas deal that was concluded this year apparently provides for settling Chinese purchases of Russian gas in renminbi; if fully realised, this would mean an appreciable role for renminbi in transnational gas transactions.

Looking ahead, use of renminbi to settle international hydrocarbon sales will surely increase, accelerating the decline of American influence in key energy-producing regions. It will also make it marginally harder for Washington to finance what China and other rising powers consider overly interventionist foreign policies—a prospect America’s political class has hardly begun to ponder.



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9 comments on “Follow The Money: Petro-Yuan & Petro-Dollar
  1. RonMamita says:

    Chinese news agency says UK sees RMB as potentially ‘main reserve currency’
    Monday, September 15, 2014

    Dear Friend of GATA and Gold:

    While it is not included in the mainstream financial news agency reports about the United Kingdom Treasury Department’s plan to issue bonds denominated in Chinese currency —

    — nor in the official U.K. Treasury statement —

    — the Chinese official news agency Xinhua quotes the British treasury secretary, George Osborne, as saying that the U.K. government has confidence in the Chinese yuan’s “potential” to become “the main global reserves currency.”

    Did Osbourne really say it? Did he say it just for Chinese consumption and are the Western news organizations omitting it to oblige? It’s a good bet that no one in those news organizations will be asking.

    The Xinhua report is appended.

    CHRIS POWELL, Secretary/Treasurer
    Gold Anti-Trust Action Committee Inc.

    * * *

    Britain to Include China’s RMB as Foreign Currency Reserve

    From Xinhua News Agency, Beijing
    Friday, September 12, 2014

    LONDON — British Chancellor of the Exchequer George Osborne announced Friday that the British government intends to issue a Renminbi denominated bond and to use the proceeds to finance the government’s reserves of foreign currency.

    “I can now announce that the UK government intends to be the first national government outside of China to issue a bond in China’s currency. We issued bonds in U.S. dollars before, now we will be issuing a bond in RMB,” Osborne said in the press release of the Sixth China-UK Economic and Financial Dialogue.

    Chinese Vice Premier Ma Kai and Osborne concluded the meeting of the Sixth China-UK Economic and Financial Dialogue in London.

    Osborne described this dialogue outcome as “a historic moment” and a statement of British confidence in the potential of the RMB to become “the main global reserves currency.”

    “And let me be clear: As China becomes a bigger and bigger part of the world economy, their currency is going to be used around the world. We here in Britain understand that, and we want us to be the first country in the west to seize the opportunities that it will bring,” Osborne declared.

    Meanwhile, the issuance of Chinese currency bond means jobs and investment in Britain, which the government’s long-term economic plan is all about, Osborne noted.


    SINGAPORE: Powerful Asian Financial Hub

    S’pore enhances role as top offshore renminbi centre

    New yuan futures contract, supported by Bank of China, will start trading on S’pore Exchange next month

    SINGAPORE — The Republic’s position as one of the major offshore renminbi (RMB) centres will receive another boost come next month as a new yuan futures contract, supported by the Bank of China (BOC), will start trading on the Singapore Exchange (SGX), amid a surge in global demand for trading and products denominated in the Chinese currency.

    The RMB market here has grown strongly following the launch of RMB clearing arrangements in May last year, noted Senior Minister of State (Finance and Transport) Josephine Teo. RMB deposits in Singapore have increased from 138 billion yuan (S$28.4 billion) in June last year to 254 billion yuan (S$52.3 billion) a year later, statistics by the Monetary Authority of Singapore showed.

    Over the same period, RMB-denominated loans including trade finance grew 88 per cent to surpass half a trillion yuan, while the average daily traded volume of RMB foreign exchange (FX) almost quadrupled on-year to close to US$70 billion.

    “In April, the Society for Worldwide Interbank Financial Telecommunication reported that Singapore had become the largest offshore RMB clearing centre outside Greater China, in terms of yuan world payments value,” said Mrs Teo, who was speaking at the BOC-SGX RMB Internationalisation Forum yesterday.

    “This corroborates with the strong growth that we are seeing in our RMB market and validates Singapore’s role as an international financial centre and regional trading hub.”

    Trading of the new FX futures contract in yuan will start on Oct 20, along with that of the Japanese yen and Thai baht, SGX said. These additions will expand the exchange’s suite of FX futures that it first launched in November last year. Currently, there are six FX futures contracts here based on currencies such as the Singapore dollar, the Indian rupee and the South Korean won.

    The BOC will be the pioneer market-marker for the RMB futures and the first Chinese settlement bank for the exchange’s derivatives market.

    “The enhanced SGX Asian FX suite widens the window for even more investors to tap the growth opportunities across major Asian markets and manage their currency exposures at the same time,” said SGX’s chief executive Magnus Bocker.

    “The SGX RMB futures complements the range of RMB-denominated investment products in Singapore and will further boost the growth and deployment of the RMB deposits pool in Singapore,” he added.

    The introduction of the new futures contract comes as the Chinese yuan is fast emerging as one of the most common international trading currencies in the world. BOC’s Offshore RMB Index showed that RMB use in international financial markets rose 73.85 per cent on-year to a record high in the second quarter of this year. As the currency continues to gain traction, there is a need for institutions to manage the risk of currency fluctuations using products such as the SGX RMB futures.

    Chief financial officer of CapitaLand Arthur Lang, who was one of the panellists at yesterday’s forum, welcomed the latest initiative. “For many foreign companies having businesses in China, including CapitaLand, some of the initiatives that we have today will perhaps allow us to raise funding offshore at a more competitive rate. They make sense from liquidity, risk management and management of FX volatility standpoints,” he said.


  2. RonMamita says:

    No Enemies at the G-20 Summit

    The geopolitical scheme is becoming clearer as the days past…

    Shift from WEST to EAST
    The currency reset and international monetary policy is being formed with the emergence of the BRICS and SCO nations leading the nations to adopt this new policy with centers in Europe and Asia…

    If wars and martial law is used it is for cover, excuses, justifications and population control…

    Diabolical, Psychopathic, Control Freakish geopolitics.

    Great Bonds with China: UK-China dialogue opens economic opportunities as Britain issues first RMB debt

    Britain to become the first western country to issue a bond in China’s currency, the renminbi (RMB).

    The Chancellor today announced Britain’s intention to become the first western country to issue a bond in China’s currency, the renminbi (RMB), as the sixth annual UK-China economic summit took place in London.

    In a clear sign of the growing strength of Britain and China’s economic ties, the government today confirmed its intention to issue a RMB bond in the coming weeks and months, subject to market conditions. The size of the bond will be confirmed at the time of issuance, but is expected to be worthy of benchmark status in the market.

    This will be the first non-Chinese issuance of sovereign RMB debt and will be used to finance Britain’s reserves. Up to now, Britain has only held reserves in US dollars, euros, yen and Canadian dollars, so today’s announcement signals the RMB’s potential as a future reserve currency.

    The Chancellor also welcomed China Development Bank’s (CDB) announcement today that it has successfully issued a RMB 2 billion (£200 million) in London, the first by a quasi-sovereign outside of Greater China.

    Together, these bond issuances will cement Britain’s position as the most important RMB market outside Greater China, and represent the next step in the government’s long term economic plan to establish Britain as the centre of global finance.

    Britain is already the fastest growing market in Europe for RMB payments, more than doubling volumes from July 2013 to July 2014.

    In 2013, total RMB foreign exchange trading in London averaged $25.3 billion per day, which was a 50 per cent increase from 2012.

    The other elements of the package agreed at today’s UK-China Economic and Financial Dialogue (EFD), which represent the most substantive set of measures ever agreed between the two countries, include:

    • CDB’s announcement that it intends to opens a representative office in London, its first in Europe. Along with CDB’s RMB bond issuance, this is a major vote of confidence in the government’s long term economic plan and in London’s role as the most global international financial centre
    • ICBC, the world’s biggest bank, has been given approval by the Prudential Regulation Authority to receive a branch licence. It is the first Chinese bank to open a UK branch in over 50 years
    • granting a licence to Lloyd’s of London to open a Beijing branch, bringing them closer to the major insurance companies based in Beijing and enabling them to do more business in China
    • Britain’s inclusion in China’s forthcoming renminbi Qualified Domestic Institutional Investor (RQDII) scheme when it launches. This will allow institutional investors in China to invest into financial markets in the UK, and for RMB funds to flow from China to the UK
    • allowing existing investment funds to be used by UK-based asset managers with Renminbi Qualified Foreign Institutional Investor (RQFII) licences, allowing them to invest directly into Chinese securities. Four UK asset managers have now been awarded RQFII licences

    Chancellor George Osborne said:

    Let me be clear. Our long term economic plan is working, but the job isn’t done. We need to export to fast growing economies like China, and attract more investment to our shores.

    To do that, we need to make sure China’s currency is used and traded here, as that will be not only be good for China, but good for British jobs and investment too.

    That’s why I’m delighted that today we agreed the next big step in making London – already the global centre for finance – a major global centre for trading and investing the Chinese currency too.

    The sixth UK-China EFD also discussed the global economic situation and trade, as well as infrastructure, investment and urbanisation.


    • RonMamita says:


      The tremendous planning and work to setup:
      The computers and clearing protocols put in place to transact in RMBs, and we must never forget that China and the IMF have been partners since 1945. They are neither strangers nor enemies. BRICS, SCO and Renminbi marches forward to the Global Reset.
      Chancellor George Osborne said:

      Let me be clear. Our long term economic plan is working, but the job isn’t done. We need to export to fast growing economies like China, and attract more investment to our shores.

      To do that, we need to make sure China’s currency is used and traded here, as that will be not only be good for China, but good for British jobs and investment too.


  3. RonMamita says:

    Map of China's largest oil fields


    full report


    China is the world’s most populous country with a fast-growing economy that has led it to be the largest energy consumer and producer in the world. Rapidly increasing energy demand, especially for liquid fuels, has made China extremely influential in world energy markets.

    China has quickly risen to the top ranks in global energy demand over the past few years. China is the world’s second-largest oil consumer behind the United States and became the largest global energy consumer in 2010. The country was a net oil exporter until the early 1990s and became the world’s second-largest net importer of crude oil and petroleum products in 2009. The U.S. Energy Information Administration (EIA) projects that China will surpass the United States as the largest net oil importer by 2014, in part due to China’s rising oil consumption. China’s oil consumption growth accounted for one-third of the world’s oil consumption growth in 2013, and EIA projects the same share in 2014.

    Read More:

    Britain to Use Chinese Currency as Foreign Reserve

    Mark this as another blow for the dollar.

    This past week, the British government announced plans to begin issuing bonds that are denominated in Renminbi (RMB), China’s national currency. The proceeds from the sale of these bonds will finance the UK’s foreign currency reserves.

    China’s presence on the global economy continues to grow, and concerns about the Euro Zone and the United States are still lingering after recovery from the Great Recession has been timid at best. The UK is looking for a leading currency to hitch their wagon to. This isn’t just speculation — prominent British officials are openly admitting it.

    We may be witnessing the rise of the renminbi.

    “Their currency is going to be used around the world.”

    George Osborne is the British Chancellor of the Exchequer (which is roughly equivalent to the US Secretary of the Treasury). After meeting with the Chinese Vice Premier, Ma Kai, Osborne brokered the Renminbi-bond issuing as a proactive step towards accepting the RMB as a major global reserve currency.

    “Let me be clear,” stated Osborne. “As China becomes a bigger and bigger part of the world economy, their currency is going to be used around the world. We here in Britain understand that, and we want to be the first country in the west to seize the opportunities that it will bring.”

    This is a monumental shift in global attitudes, but not one that is completely unexpected. Ever since the Breton Woods system was instituted following WWII, the United States has simultaneously abused its position as a global economic leader and pursued inflationary policies that have significantly weakened the dollar.

    And now America’s closest ally has begun to hedge its bets by moving towards the RMB.

    Get accustomed to the sight of these.

    “The UK government intends to be the first national government — outside of China — to issue a bond in China’s currency. We issued bonds in US dollars before, and now we will be issuing a bond in RMB,” continued Osborne.

    Significance of RMD Bonds in UK

    So what exactly does the UK intend to do with billions of RMB? The exact course of action pursued by the British Government will be closely watched by the entire financial world. These events are far more significant than, say, Russia or Iran moving to use more RMB. This is a traditional western power that is acknowledging the pending financial supremacy of the east.

    If the UK is angling to become a major center of Renminbi trading, which this seems to signal, the demand for Chinese currency will continue to look more promising moving forward than the dollar or the euro.

    The United States may act to try to corral its economic allies and preserve the reserve-currency status of the dollar, but there is no guarantee that anyone is listening anymore. Clearly, the British believe that they can generate more jobs and more investment through RMB purchases than they can through greenbacks.

    This also suggests that the UK is angling towards not joining the EU as a full member, which is an entirely different (though not unimportant) issue.

    What this Means for the Dollar

    Time to find an asset that the dollar can't damage.

    Britain is now the fifth country to allow direct currency trade in Shanghai (following Australia, New Zealand, Japan, and even the United States), and the train that is the Chinese monetary revolution keeps chugging along.

    Is this move a definitive nail in the coffin for the dollar? Probably not. The US has 70+ years of entrenched financial agreements. The rate at which those seem to be unraveling, however, is startling. This is another example of that.

    The timeline is not clear, but the trendline is. The days of the dollar dominance are dwindling, and savvy investors are going to follow the UK’s lead and begin hedging their dollar bets.

    When the dollar loses, gold gains. Use our resources to learn about responsible and tax-advantaged ways to use precious metals to your advantage. Sign up for our Free Investor’s Kit, provided by Regal Assets, and start protecting your future today.


  4. Wow. I note that the China’s president also skipped the climate change summit at the UN.


  5. RonMamita says:

    Hunt for Taxes Target Corporations


    The world economy is imploding faster than anyone suspects. Governments cannot get it through their thick skulls that they consume money – they do not create economic growth. The higher the tax burden, the less disposable income, and the lower economic growth be it individuals or corporations. The difference is capital can flee, labor cannot. That is changing with FATCA. They are hunting global capital but in the process they are wiping out international commerce. The NSA has contributed by now inspiring others to replace US technology because American companies have been compromised. All of this bodes very badly for the future post 2015.


  6. RonMamita says:

    Under Currency Wars Engineering Emerges Global Currency

    Currency War! China Begins Trading with Euro!
    Posted 30 Sept 2014
    China will start direct trading between the yuan and the euro tomorrow as the world’s second-largest economy seeks to spur global use of its currency.
    Dethrone ‘King Dollar’
    United States dollar as the world’s reserve currency.
    The World Bank’s former chief economist wants to replace the US dollar with a single global super-currency, saying it will create a more stable global financial system.
    The World Bank’s former chief economist wants to replace the US dollar with a single global super-currency, saying it will create a more stable global financial system.
    Replace dollar with super currency: economist


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