Chinese Economics Thread

[tphuang]

https://twitter.com/i/web/status/1629931923299528706

This is quite a change I guess. China reopening causes enough inflationary pressure that the fed is forced to raise rates and send us economy into recession.

The other interesting side effects is how this affects us budget

https://twitter.com/i/web/status/1629148185884078082

Think about this, more spent on interests than the military. As long as interest keeps going up and stay high, it will give significant pain to us budget.

 

[escobar]

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[supercat]

China's lithium industry, including the battery recycling business, is booming.

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[escobar]

Eventually there may be more payments in other currencies but the pricing of oil will remain in dollars

Ask quietly in government circles in Riyadh, Abu Dhabi, Kuwait City or Doha about the petroyuan, and the response — even in the weeks following Xi’s visit to Riyadh — is unanimous: the petrodollar is here to stay. On a recent trip to the region, I didn’t hear a single official talking seriously about making preparations to introduce a new currency to the mix. The answers sound a lot like this: What’s in it for us? The greenback is freely convertible, the yuan isn’t; the dollar is liquid, the yuan isn’t. That’s the polite version; the more candid answers sounded even more emphatic about the absurdity of turning to a managed currency produced by an opaque and unpredictable financial machine.

As in every conspiracy, there’s a grain of truth in the petroyuan tale, however. Xi did encourage the region to embrace the yuan for oil trade. But rather than pricing oil in yuan, as many had expected, Xi simply asked Middle East producers to accept payments in yuan.

Although China is Saudi Arabia’s largest oil customer, taking roughly 26% of its oil exports, the combination of Japan and South Korea surpasses that share, reaching 28%. Add Taiwan, and the trio account for nearly one-third of Saudi petroleum exports. If you say “yes” to the petroyuan, how can you refuse, say, the petroyen and the petrowon?

The appetite among OPEC producers to price oil in yuan using a Chinese exchange is almost nil. Middle Eastern national oil companies closely watch how Beijing tries to manipulate local commodity prices such as iron ore, cotton, coal or grains every time prices rise above its pain threshold. Having spent 60 years building a formidable cartel, why would Middle East nations cede pricing power to China?

https://twitter.com/i/web/status/1630106765042896896

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[BlackWindMnt]

Eventually there may be more payments in other currencies but the pricing of oil will remain in dollars

https://twitter.com/i/web/status/1630106765042896896

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Would you really tell your bully that you're planning to paralysing him/her for life.

 

[TK3600]

Eventually there may be more payments in other currencies but the pricing of oil will remain in dollars

https://twitter.com/i/web/status/1630106765042896896

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True, there is no compeling reason for them to agree in short term. What China need is to create the conditions first. Once they trade in Yuan they will be compelled to make business in China. Once they discover the compelling deals they will need more yuan. It is like crack. The desire feed on itself. At some point petroyuan will stop looking stupid.

Bonus point: Biden can help China by really piss off gulf states again.

 

[Serb]

Eventually there may be more payments in other currencies but the pricing of oil will remain in dollars

https://twitter.com/i/web/status/1630106765042896896

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That's a low-intelligence response from an angry, butthurt westerner perspective, simple as that.

China never asked for ALL oil deals of Saudi Arabia to be priced in yuan in the first place.

They all asked for a PART of their OWN trade, between China and Saudi Arabia to be.

Regarding another stupid comment on South Korea and Japan and "petrowon",

First, neither of those countries asked for it, nor do they have growing demand like China.

China is not only what they buy now, but what they buy in the future, unlike Japan's dead economy.

Nor are Japan and South Korea current superpowers and possible overlords of the future like China.

 

[escobar]

In 19 metals, China and Russia are responsible for over 40% of supply

 

[siegecrossbow]

True, there is no compeling reason for them to agree in short term. What China need is to create the conditions first. Once they trade in Yuan they will be compelled to make business in China. Once they discover the compelling deals they will need more yuan. It is like crack. The desire feed on itself. At some point petroyuan will stop looking stupid.

Bonus point: Biden can help China by really piss off gulf states again.

Gordon Chang: I have reliable information from a Wumao forum that China is selling crack to Saudi Arabia.

 

[tphuang]

While I do appreciate the author actually talking to the GCC countries, there are some very obvious flaws in the article.

He is likely to be talking with Western friendly sources who are going to not want to alarm the West. The decision to sell oil in non-USD currency is a political decision. And as long as most of Saudi military uses US weapons, they will tread very carefully about not using USD.

The argument that Yuan is not floating is just nonsensical. The offshore RMB is very much floating and I've traded it myself.

US allies may import more from Saudi Arabia but they are not requesting it to be traded in their native currency.

Saudi Arabia is competing against much cheaper Russian/Iranian oil for the Chinese market. They are trading oil for Chinese technology and infrastructure in their future economy transition. Again, these are not scenarios that EU and Japan/Korea can present to the Saudis.