China, the world’s biggest oil importer, wants to use its own currency to price the world’s most-traded commodity and has already launched the first crude futures contracts priced in Chinese yuan on the Shanghai International Energy Exchange since March last year. How soon will the petro-yuan replace the petrodollar and break the dollar’s hegemony?
The Point: Will Petro-Yuan Replace Petrodollar Sooner?
I would like to know a little bit more about that. What do you think of the possibility of Saudi Arabia agreeing to sell oil to China in the Chinese renminbi. How do you see the significance of that. And do you see the deal in very possibly pulling through.
Well nearly 14 trillion dollars the market on this oil price think and then it will be important challenges for China in a long time. And I'll that the new contracts will be as Yuan pricing of oil. So this is a threat for U.S. dollars in the market. You know it's a trade war. Will be changed to a currency war. All hegemony of the U.S. is based on the dollar and especially the huge market of the oil market. So it still has the huge army and the power and dominating the country. But this is so important. China is the biggest oil exporter and their consumer and the third one is the India. So is this a yes. And of course the Saudis are the biggest sellers in the world and if their contracts will change and if this is successful then it's also shifting to other pullbacks like payment payments that with yuan including metals and mining materials so it's lungs that for the world to understand the change but the renminbi I mean the yuan will be as powerful and then it will show that China is going to show that there is a guarantee that a superpower in the international area.
OK Professor Lui Baocheng how far apart how far. Still Ali because we only started the renminbi priced futures since last March. And at this moment I must say China is trading. China is trading with Russia in oil and indeed with Venezuela with Angola but how how much more stamps does China need. Until we are able to buy the most important commodity for the Chinese economy and our currency.
Well it depends on three key factors. Number one is we continue to be the biggest buyer seems a tool until we really discover a very powerful alternative energies within China. So number two is that the army has to be kept on a very stable basis so that more confidence can be gained from the global community. 3 There is some way of convertibility Arm B versus other dominating currencies around the world. It seems that the liberal Nation of the capital is on a very top agenda for China's currency. I think this I would say you know overall the stocks change over theU.S. not only the risk management for China but also risk management for those export them countries also that they place different currencies in different baskets. So I would estimate within three or five years not the denominator be in pecial can be very sick.
How much of a threat will that be to the money of the U.S. dollar.
Well I do not see actually a very direct confrontation at least from the from the U.S. administration honestly speaking is really how China can really earn credibility by recoverability and by maintaining the currency on a very stable.