Israel Matzav

Oil deals being made in local currency ignoring the dollar

China and Qatar have reached an agreement to price their oil deals in Chinese yuan.

Chinese Prime Minister Wen Jiabao, who visited Doha last week, disclosed at a press conference on Friday: a) China proposes to invest in the manufacturing of ”downstream oil products, which are most urgently needed by Qatar”; b) China and Qatar signed an agreement to jointly build a refinery in Taizhou, Zheijiang, in China; c) Chinese companies propose to participate in infrastructure projects in Qatar; and d) China and Qatar are

discussing a “long-term, stable and comprehensive cooperative partnership” in natural gas.

Then, Wen quietly dropped a bombshell. He revealed “one more important point” as if it were an afterthought. He said:

In order to address investment issues, we [China and Qatar] need financial support. Therefore, we reached another agreement, a cooperation agreement linking finance with investment. Qatar also proposed the use of local currency in trade settlement and even a specific ratio. I think this proposal can be studied.

The short point is, the renminbi, the “people’s currency” also known as the yuan, is appearing in Doha. The China-United Arab Emirates (UAE) currency swap deal which was signed during Wen’s visit to Abu Dhabi last week already brings the yuan to the Emirates. The deal with the UAE is worth US$5.5 billion and the Chinese central bank statement said that it aims at “strengthening bilateral financial cooperation, promoting trade and investments and jointly safeguarding regional financial stability”.

And they're cutting similar deals with Iran.

If there are four more years of Obama, China will be the World's preeminent power, and the US will be relegated to second-rate status or worse.

The 'human rights' organizations ought to be screaming in the streets about this. But they're not.

What could go wrong?

Read the whole thing.

Labels: China, Iran, oil production, Qatar

posted by Carl in Jerusalem @ 7:53 AM