Non-US Dollar trade is now a marketing term
I believe today (December 9th, 2022) we saw somewhat of a coup d’état, a major step towards leaving the US Dollar behind, in a blistering scenario.
1. Xi Jinping’s visit to the Kingdom of Saudi Arabia (KSA) encompassed three separate summits, the first being China’s state visit to Saudi. Two other summits, a China-Gulf summit, and a China-Arab summit, with leaders from Gulf Cooperation Council countries and Arab states, are also in the line-up. So, it is a series of summits.
Xi Jinping was welcomed on purple carpet, for royalty, and with much pomp and circumstance. I guess the Abrahams Accords are lying in a river somewhere, abandoned. He also met with Palestinian President Mahmoud Abbas and Egyptian President Abdel Fattah El-Sisi
Early in the day, we started getting indicators that the trade agreements signed during these three summits will be non-Dollar trade. What actually happened is quite vast in scope.
China will continue to import large quantities of crude oil from GCC countries, expand imports of liquefied natural gas, strengthen cooperation in upstream oil and gas development, engineering services, storage, transportation, and refining, and make full use of the Shanghai Petroleum and National Gas Exchange as a platform to carry out yuan settlement of oil and gas trade.
The number of trade agreements signed exceeds 24 separate deals. Xi Jinping proposed further areas of cooperation in the next three to five years, including finance and investment, innovation and new technologies, as well as aerospace, and language and cultures. China will carry out financial regulatory cooperation with GCC (Gulf Cooperation Countries), and facilitate GCC enterprises to enter China’s capital market, establish a joint investment association with GCC, support sovereign wealth funds of both sides to cooperate in various forms.
I have not seen a number inked below these various agreements. This is of lesser importance as Big Money has met Big Money. The preparatory work for these three summits would have been huge and yet, it escaped the notice of most. It will of course be vast in monetary terms, and with the proposed areas of cooperation following, we can extrapolate that many of those already have draft agreements ready.
Let us segue for a moment. We’ve all heard of the long arm of the US law specifically in issues of US dollar usage. To explain this very simply is that the US, through their instruments such as Swift, claims an erstwhile jurisdiction on any transaction anywhere in the world, that is done in their dollar. This then is the core of the financial power of the dollar. Or shall I say, the core financial power of the US Dollar eroding fast.
2. In St.Petersburg, Russia, a similar summit reached its culmination today at a meeting of the Eurasian Economic Council Summit
The EAEU member states have signed agreements to implement financial industrial cooperation equivalent to $270bn – here is the stated kicker – business will be done in non-dollar terms.
This is why I say trade in non-dollar terms is now a marketing slogan and we will see more and more countries following. The US Dollar is therefore being left behind in new business done and the tone is set by China / Gulf States / EAEU. The concept of free trade is also being changed materially to major trade in blocs and blocs will have their trade agreements. It remains to be seen how organizations such as WTO will reform. The long arm of the law in terms of the US Dollar is Done and Dusted and being Ditched! Welcome to practical multipolarity.