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DECEMBER 2022

Beijing-Riyadh Cooperation Advances De-Dollarization Process

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Beijing-Riyadh Cooperation Advances De-Dollarization Process

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De-dollarization of world economy is reaching unprecedent levels.

Written by Lucas Leiroz, researcher in Social Sciences at the Rural Federal University of Rio de Janeiro; geopolitical consultant.

Amidst the unstable relations between Saudi Arabia and the US, which since last year have oscillated between a total boycott and a moderate cooperation, Riyadh now shows interest in contributing to advance the process of de-dollarization of the world economy. According to recent reports, the Saudi government is willing to trade oil in Chinese Yuan. The measure would be a major blow against the American financial power, which has the Petrodollar as its base of monetary security.

According to the Wall Street Journal (WSJ), in an article published on Tuesday, March 15, Riyadh is considering starting to price and trade its oil sales in Chinese Yuan, abandoning the dollar standard. The piece also informs that such a pricing plan has been in development for six years, having been accelerated recently as a reaction to the strong pressure exerted by the Biden government against Saudi Arabia. In the words of one of the WSJ’s Saudi informants: “The dynamics have dramatically changed. The US relationship with the Saudis has changed, China is the world’s biggest crude importer and they are offering many lucrative incentives to the kingdom (…) China has been offering everything you could possibly imagine to the kingdom”.

As expected, the impact of the news on the financial market was immediate. The value of the offshore Yuan has risen considerably compared to the dollar across the Asian market, generating many expectations of investments in the Chinese currency. The impact is expected to be even greater in the coming days or weeks, considering that, amidst the current context of tensions and conflicts, Riyadh has the ideal scenario to make public and advance its financial measures of de-dollarization without waiting for large-scale international sanctions on the part of the West – which has other priorities at the moment.

In fact, the Saudi maneuver seems interesting and of high strategic value at the moment. China buys more than a quarter of Riyadh’s massive oil exports and since 2018 has offered a series of contracts priced in renminbi. Furthermore, cooperation appears to be increasing in both directions. For example, state-owned Saudi Aramco announced last week that it would help build a new oil refinery in northeast China with the capacity to produce 300,000 barrels a day. Apparently, Beijing sees Riyadh as a key energy ally for the Belt and Road Initiative (BRI) project, and, on the other hand, Riyadh sees the BRI as a great opportunity for profitable short-term investments. In this sense, pricing in Yuan would be an even greater engagement in cooperation, which would benefit both sides and help to reduce global dependence on the dollar standard.

Obviously, despite the clear direct economic interests, it is not possible to ignore the deep geopolitical aspect of the issue. The current US administration has maintained the most anti-Saudi stance ever seen in the White House. Last year, Biden even stopped US support for the Saudi campaign in Yemen – although he was “restricted” in many ways by the US arms industry. Biden maintains a strong humanitarian and liberal ideological stance, which does not allow him to agree with an undemocratic regime and with a campaign as violent as the war against the Houthis. In addition, he is “compelled” to renounce his democratic principles on several other points – such as the Ukrainian dictatorial regime, for example -, so he needs to choose some targets of lesser strategic importance to maintain his image as a global defender of democracy, and, apparently, he chose Saudi Arabia.

The very conflict on Ukrainian soil also favors this type of measure, as there is a global trend towards multipolarization on several levels, including the economic and financial ones. China stands against the boycotts on Russia and elevates its partnership with Moscow in every way possible, which means that the West may soon also implement coercive measures against Beijing. So, Saudi Arabia takes advantage of the moment in order to enter a possible new market route, with prices in Yuan, serving the interests of China, its partner nations – including the entire BRI – and the BRICS. In this sense, de-dollarization seems just a natural consequence of the process of formation of a polycentric world, as it is being designed with the events in Eastern Europe.

With this global scenario, the West will have a single choice: to understand that a multipolar global order presupposes multiple monetary standards, with no more room in for dependence on the American Dollar. It is inevitable that the dollar will become just another possible currency in international transactions, competing not only with the Yuan, but also with other currencies and digital assets, such as cryptocurrencies. Obviously, it is possible that Washington will re-establish good ties with Riyadh in the future, but stopping de-dollarization no longer seems an attainable goal.

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JFS Brasil

Salve NR!

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4иđ1

Is US gonna bring “democracy” to Saudis if they complete the de-dollarization ? US empire falls but as a center of warlike imperialist and reactionary power as it is defenitely wont gonna let this happen … probably it will be again Putin’s fault

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Dummy Perez

I won’t be surprised when CNN starts calling for elections in Mecca …LMAO!!!

JJ345

Fk no, I think people need to read more about why KSA did this and you see it is not the first time they did it, and they doing it to get more support from the USA. They are piss at yanquis mainly for 2 reasons right now, 1 Iran nuclear deal, and 2 the Yemen war. It is not that hard to understand. Also, the USA is moving away from KSA, the US used to buy a lot of oil from KSA back then and now guess who is buying more oil from KSA? China. The de-dollarization process going to take sometime before we see a bold move from the USA.

P.S KSA is yanqui’s playground, you clowns.

Romo

Tottaly correct!!!

Angry American

America is broke. We are out of money and inflation is just beginning. I don’t think people will allow another war but judging what I’m seeing with all the one sided reporting and blind acceptance of the one sided narrative, I have lost faith in the reasoning abilities of the American People so anything can happen. It’s more likely that as the world starts turning away from the dollar, the US will lash out more and more and when that doesn’t work, it will lash out at it’s own citizens as it spirals down into the abyss. I’m sorry to say it but bad times are ahead for everyone.

chakri

and west Europe will fall with them

cpatcha

I hope this becomes official asap! we need a multipolar economy.

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Huehueheee

I hope they both will trade in ruble

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JJ345

“DE-DOLLARIZATION PROCESS” Slowly but surely, and it is all thanks to yanquis themselves acting like morons tbh.

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goingbrokes

Joe Biden’s record: military defeat in Afghanistan, strategic defeat in Ukraine (yes, it is certain), massive acceleration in de-dollarisation, world-wide inflation by abandoning realpolitik for self-destructive sanctions against Russia leading to the terminal fracturing of western alliance system, and then trying to reclaim realpolitik by grovelling to previous favourite enemies like Iran and Venezuela begging please just a little oil. You’d think it can’t get any worse! BUT… Oh yes it can! A couple of more months and it’ll become clear what more is in store. Grab some popcorn if your stores can still supply…

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Loki

Afghanistan was Bush from the beginning and the deal to leave was made by Trump. He timed it very well to put it onto the next administration. One fucker fucking up another fucker. Politics as usual. 🤷

Elfe

Moslems sind die am stinkendsten Leute auf der Welt und Saudi-Arbien ist ihr Land gleich gefolgt von den USA Schweinen.

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Ahson

Nonsense! All GCC money is invested in western financial institutions. The west has a choke hold on the GCC. Anyone who doesn’t know this should just go commit suicide because he’s just a fool.

Shahna

“All GCC money is invested in western financial institutions.”

And they realised …. it doesn’t have to be.

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