China Settles First LNG Trade in Yuan in Latest Hit to Dollar

China is playing chess, Biden is playing tiddlywinks.

A Chinese oil company settled its first LNG trade in yuan this week, in another move that challenges the US dollar’s dominance in world trade.

China’s long-term battle to reduce the power and reach of US dollar hegemony took two steps forward this week

China is playing chess, Biden is playing tiddlywinks.

BREAKING: India ditches U.S. dollar, will trade in Rupees with multiple countries going forward.

The worlds largest countries are teaming up against the U.S. dollar & the White House is busy with ‘Trans Visibility’ week.

— Collin Rugg (@CollinRugg) April 1, 2023

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Saudi Arabia, China in Yuan-Based Oil Sales Talks – WSJ

John Rubino here: De-Dollarization Just Got Real

China Settles First LNG Trade in Yuan in Latest Hit to Dollar

By: Asia Financial, March 30, 2023

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China’s long-term battle to reduce the dollar’s dominance in world trade took two steps forward this week, with the first LNG trade in yuan, plus Brazil agreeing to trade via local currencies

China’s long-term battle to reduce the power and reach of US dollar hegemony took two steps forward this week. And further such moves appear to be in the winds.

First, the Brazilian government announced on Wednesday that it had agreed with Beijing that all bilateral trade will now be settled in their local currencies, rather than the dollar.

The second step was news that China’s national oil company CNOOC and France’s TotalEnergies had completed China’s first LNG trade settled in yuan.

The Shanghai Petroleum and Natural Gas Exchange made that announcement on Tuesday.

Approximately 65,000 tonnes of LNG imported from the United Arab Emirates changed hands in the trade, it said in a statement.

TotalEnergies confirmed to Reuters that the transaction involved LNG imported from the UAE but did not comment further.

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The state-owned Global Times quoted Chinese oil experts who hailed yuan settlement of international LNG trades as “a major event in China’s market-oriented oil and gas reform”, with a CNOOC manager saying it would help “build a diversified ecosystem for LNG trading”.

It said internationalization of the Chinese currency had made “remarkable progress” in recent years, noting that while it only accounts for 7% of all foreign exchange trades globally, the yuan had “become the world’s fifth-largest payment currency, the third-largest currency in trade settlement and the fifth-largest reserve currency”.

China has moved to settle oil and gas trades in yuan in recent years in a bid to promote its currency internationally and to weaken the dollar’s grip on world trade.

Russia has, not surprisingly, increasingly embraced the yuan amid Western sanctions imposed after it invaded Ukraine in February 2022.

During a visit to the Saudi capital Riyadh in December President Xi Jinping announced that China would “make full use” of the Shanghai exchange as a platform to carry out yuan settlements of oil and gas trades.

ASEAN ministers discuss local currency use

Meanwhile, interest in greater use of local currencies is growing in ASEAN, particularly for trade within the region.

Talks about reducing dependence on the US dollar, plus the euro, yen and British pound and moving settlements to local currencies was a key topic at a meeting of ASEAN finance ministers and central bank governors that began in Indonesia on Tuesday, according to a report by ASEAN Briefing.

Ministers and central bank chiefs have previously discussed a Local Currency Settlement Scheme and are keen to expand the use of local currencies for trade with a regional cross-border digital payment system, the report said, adding that five of the region’s biggest economies – Indonesia, Malaysia, Singapore, Malaysia and Thailand – agreed to do cooperate on this in November 2022.

“Indonesian President Joko Widodo has urged regional administrations to start using credit cards issued by local banks and gradually stop using foreign payment systems,” it said. “He argued that Indonesia needed to shield itself from geopolitical disruptions, citing the sanctions targeting Russia’s financial sector from the US, EU, and their allies over the conflict in Ukraine.