Accepting payment in RMB, Russia surpasses Saudis as China’s biggest oil supplier

A giant step toward dedollarizing world trade

by Don Hank

In October of 2014 I lambasted US media here for refusing to alert Americans on the dedollarization scheme of non-aligned countries. Readers either didn’t discuss this with me or they told me the world would always prefer the dollar.

Then in December of 2014, posted my translation of an eye-popping interview with a Chinese monetary policv expert who clearly showed that our allies, eg, in Europe, were busy setting up RMB (yuan) clearing centers, a clear sign that they believed in the future of the yuan in world trade. Again, my readers snoozed through this and the usual subjects said the yuan would never be accepted in international trade. Period.

In March of this year, I wrote a disturbing article here showing that a 1973 agreement with the Saudis obliging them to charge only USD for their oil exports was most likely the most important pillar propping up the US dollar and that if the Saudis ever reneged on this agreement, there would be little support for the USD.

In april of this year, I showed here that almost all US allies had turned their backs on the US-run World Bank and IMF by joining the Chinese-led AIIB. I told them the US could not compete with the AIIB because it was bullying it clients, for example, into accepting gay sex and privatization. At the end of the article, I warned that the “petroyuan” might be on the way. I got little reaction but again, normalcy bias led some to tell me I was worried for nothing.

The RMB has made a lot of progress in dedollarizing world trade and obviously, this is because ordinary Americans don’t see or don’t want to see it coming and the media refuse to talk about it. Therefore politicians and the Fed will do nothing about it. And now that it is too late, they are bitterly flailing about at the rest of the world.

But now we are at the talking stage regarding dedollarization. I now see an increasing number of articles in the Western press candidly admitting that the RMB is being used more and more in world trade. The latest event in this series is Russia’s acceptance of the RMB for oil payment in such a way that Russia has snatched the title of top supplier from none other than the Saudis, who seem to have made accommodations for this by raising Asian oil prices. Thus, without literally reneging on the 1973 agreement, they have made it easy for the Russians and Chinese to dedollarize, thereby cleverly circumventing the agreement.

I have also commented here and here showing beyond that shadow of a doubt that Russia had been helped more than harmed by US-imposed sanctions. These too garnered criticism from highly educated people including investment experts and authors who think the dollar is still sound as a you-know-what.

The story appears below in my translation from the Chinese journal The information reported here can also be found piecemeal in English in the msm.

Translation of

Accepting payment in RMB, Russia surpasses Saudi Arabia as largest supplier of crude to China

At 8:25 on June 25, 2015 article business community favorites

Business community June 25

According to the Energy website, with the Chinese oil market share battle heating up, Russia has become China’s largest crude oil supplier (45.70, -0.24, -0.52%), surpassing Saudi Arabia.

According to e-mailed data from China’s General Administration of Customs on Tuesday (June 23), China’s imports from Russia in May amounted to 3,920,000 tonnes of oil, equivalent to 927,000 barrels a day, a record high, or an increase of 20 percent MoM, while imports from Saudi Arabia decreased by 42% to 3.05 million tons of oil compared to April.

The surge in domestic production of shale oil reduces US dependence of the US, the world’s largest oil consuming country, on foreign oil supplies, making China an important market for the world’s oil-exporting countries. The IEA [International Energy Agency] forecast in June of 2015 that Chinese oil demand will account for over 11% of global oil demand.

Chief oil analyst Amrita Sen of oil and gas analyst Energy Aspects said in an email: “As the Middle East oil was obliged to contend with competition from other parts of the oil market, Asia has become the darling of Russian oil exporters. Russia is paying increasing attention to its east, where its largest oil producer Rosneft has made a wide variety of transactions with China and is is likely to make more steady inroads for Russian oil into China.”

Supply from Russia increases thanks to acceptance of payment in RMB

Gordon Kwan, Head of Regional Oil & Gas Research at Nomura Securities commented in an e-mail on China’s currency: “After Russia begins to accept renminbi as a payment method for the purchase of oil, we expect to see more Russian oil exported to China. If Saudi Arabia wants to return to the throne, it needs to accept renminbi as payment for oil, not only the US dollar.”

Since Western countries imposed sanctions on Russia in the dispute between Russia and Ukraine, Russia has been looking for new markets for its oil. As a result of these efforts, Russia has become China’s largest oil supplier for the first time since October 2005. In 2013, Rosneft and China National Petroleum Group signed a $270 billion deal, with the former agreeing to supply 365 million tons of oil to the latter over the next 25 years. That year, Rosneft reached an $85 billion ten-year agreement with China Petroleum & Chemical Group.

Angola to China’s second-largest supplier of crude oil

In May, Russia was not the only oil-exporting country to surpass Saudi Arabia.

Data show that in May Angola sold 3.26 million tons of oil to China, an increase of more than 14%, becoming China’s second largest oil supplier. In the past 13 months, Saudi Arabia has lost its title as China’s largest oil exporter for the first time.

China General Administration of Customs data also show that Iran exported 2.2 million tons of oil to China. Iran had previously estimated that during the international sanctions, it could double its global oil sales within six months, and the international sanctions expires on June 30.

Saudi Arabia raised the price of oil supplied to Asia

In April, Saudi Arabia exported 5.26 million tons of oil to China, reaching the highest level since July 2013, capturing more of the Chinese oil market.

It is reported that, in the past four months, Saudi Arabia has raised the price of oil supplied to Asia. According to a public statement issued by Saudi Aramco, in July the price of Arab light crude and medium crude has been set to the highest level in 10 months.

Energy consultancy SCI International analyst Gao Jian told us on the phone: “Russia has used its good relations with China to increase oil supplies to that country to become China’s largest supplier of oil.  At the same time, since Saudi Arabia’s oil price is less attractive in Asia, it loses the title.”

Translated by Don Hank

China sullies Obama at election time

By Don Hank

Chinese leader Wen Jiaobao went to the EU-China summit a few days ago and told the EU he won’t revalue the renminbi upward, and that they should stop “pressurising” China to do so. He said the problem with the euro is the fluctuation of the dollar. That would put the ball in Obama’s court.

To drive home Wen’s point that China won’t take orders, the Chinese leadership recently blanked out all cyber searches in China pertaining to the Nobel prize, which went to a jailed Chinese dissident. And it wasn’t just mention of the dissident that they blanked out. It was the search term “Nobel.” To make sure people paid attention, they threatened sanctions against Norway for its role in the decision, even though the Norwegian government has no known hand in the decision to award the prize.

So why so many slaps in Western faces all at once? If you read between the lines, there really was one main target face, and that was Barack Obama’s.

You may recall that at the Copenhagen Climate Conference, Obama had to track down his Chinese counterpart, who was deliberately snubbing him. This, coupled with China’s past warning regarding the adverse effects of Obama’s stimulus spending, and now this Chinese stance toward Brussels and Norway, should tell you something.

The Chinese leadership is not just rejecting the West’s praise for one of its dissidents. Much more significantly than that, it is showing its contempt for the arrogant group that granted the unknown Marxist upstart Barack Obama a Nobel Prize but was at a loss to explain why it had done so. Coincidence or not, this indirect but transparent sullying of Obama comes right around election time when Americans are looking to a dazed Obama (who has lost a significant amount of both popularity and cabinet members) for a sign that he can lead.

As I pointed out here, the Chinese leaders have moved safely beyond Marxism, having (barely) survived the murderous ravages of Marxist true-believer Mao. The fact that Obama is enamored of Maoist schemes is almost certainly not lost on them. Yes, technically, they are communists, and Mao is still celebrated, mostly for the sake of his useful idiot followers, but that’s as far as it goes.

This anti-Mao sentiment in the leadership is no secret. As soon as Mao died, Deng Xioaping’s government reversed Mao’s virulent anti-capitalist stance and propagated the slogan “to get rich is glorious.” It even tolerated films critical of Mao’s leadership. (Probably the most powerful and best-made of these is “To Live,” which you can rent from Blockbuster or buy, for example, from Amazon).

The Chinese leadership knows that a man holding the office of President of the United States has no business honoring their disgraced past leader. On a visceral level, I believe they cannot help but resent Obama for admiring the man who almost destroyed their country, and their actions so far have not dissuaded me of this conviction. To the contrary, the Chinese leaders are showing for Obama the same contempt he showed for the Israeli Prime Minister. Politics is, after all, personal, despite the lofty pronouncements of its practitioners. But on a purely pragmatic level, they must be anxious to have Obama replaced by a president less intent on weakening America’s economy through astronomical borrowing and spending – a president who will strengthen their most important trading partner (what can they sell to a poor country?).

The Chinese contempt of Obama is ignored by the power elite in the West because it is not compatible with their diplomatic philosophy, and they are clearly in denial.

Western elites have taught for many years that government should always speak easy and carry no stick but Chamberlain-like appeasement and dhimmitude.

Hence, the US and the EU have, in recent years, trodden easy with China, careful never to rile her leadership.

Obama, while pretty much sticking to this elitist playbook, has departed from it in his China encounters, flush with a false sense of power throughout the West. For example, in February 2010 he blustered that he would get much tougher with China. After all, he is the most powerful man in the world, right? He was cheered like a conqueror in Europe during his campaign. He commanded the attention of the entire Western ruling class, even winning a Nobel without lifting a finger. Can’t the Chinese also plainly see that Obama was a god?

Just as liberal leftists truly believe in Keynesian economics (what Reagan called “voodoo economics” – namely, the doctrine that government can spend itself out of an economic crisis), they just as devoutly believe that anything can be accomplished at the bargaining table that was once won on the battle field, particularly when one is surrounded by a large alliance when facing down a foe.

Thus the reigning principle in Western statesmanship is “strength in numbers” – i.e., the notion that supranational groups like the UN and the EU combine enough synergism and population volume that no single country can resist their efforts.

What they have forgotten is the overriding principle that, all things being equal, there is more power in patriotism, national pride and admiration for a wise and skillful nationalist leader than in a soulless, cultureless union of dissimilar states held together at the top by power lust and self-interest but dangling loose at the bottom, particularly when the leaders of these allied states have intentionally waged a years-long culture war against their own increasingly resentful people.

There comes a point at which people have been so indoctrinated with anti-patriotic propaganda that they ask themselves: Who cares if my side wins? 

That point is now in Europe and soon in America.

Napoleon demonstrated this principle at Austerlitz when, with 70,000 men, he defeated the 90,000 man strong combined forces of 2 Empires, Russia and Austria – and then turned around and defeated the Prussians just to show who was boss.

It will always be this way. Some nations rule, others lose, and when national pride and the will to triumph meet an alliance of forces dissimilar in culture, tongues, and religions, and a vanishing sense of what they stand for, the multicultural alliance had better tread carefully.

There may be strength in numbers, but, as China is teaching us, there is only weakness in diversity.

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