Recently, China and Russia signed a huge contract on oil and gas. Russia will export 1 100 million tons of oil and 1 100 million cubic meters of natural gas to China in the future, worth hundreds of billions of dollars. The most surprising thing here is that oil and gas trade is settled in euros instead of dollars according to international practice. Then why is this huge trade contract settled in euros instead of dollars? Will this have an impact on the dollar hegemony system?
First of all, this huge energy contract is traded in euros, because it can basically achieve mutual benefit among China, the Russian Federation and the European Union.
From the perspective of China, the euro in China's foreign exchange reserves is relatively poor compared with the US dollar. In the whole international trade payment system, the euro accounts for about one third, and the US dollar accounts for about 60%. The difference is that the euro can only circulate within the EU system in most cases. To put it bluntly, most countries still recognize the US dollar in the process of international trade payment. China's trade surplus with the EU will restrict the use of the euro, and with China becoming the largest trading partner of the EU, the trade surplus of the euro may become larger and larger, and the useless euro in its hands will depreciate, which can be well solved by using the euro in its trade with Russia.
From Russia's point of view, since the dollarization of Russia, the proportion of US dollars in its foreign exchange reserves is getting lower and lower, while the proportion of Euro and RMB is getting higher and higher. Russia not only has very important trade relations with China, but also has various trade relations with the European Union. If the transaction is conducted in RMB, then Russia will have more RMB. However, the proportion of RMB in international trade payment is relatively low. Russia's use of RMB will be restricted, and it can only be used for trade with China, but it is different to settle in euros. Russia can trade with EU countries by earning euros from China, which greatly increases the flexibility of Russian international trade payment.
From the EU's point of view, China is very willing to use the euro to trade with other countries, because China, as the world's largest trading country, uses the euro to conduct global trade, which can greatly increase the proportion of the euro in international trade, thus enhancing the international influence of the euro, and the promotion of the influence of the euro is also conducive to suppressing the influence of the dollar to a certain extent, which is conducive to the balance of international trade. Therefore, it can be said that the use of the euro in large-scale oil and gas transactions between China and Russia can be described as "killing three birds with one stone".
Secondly, the tripartite reciprocity between China, Russia and Europe is not good for the US dollar. There is a simple reason. One of the most important tools for the United States to harvest the world is dollar hegemony. It is precisely because of the existence of dollar hegemony that the Fed can periodically raise interest rates or cut interest rates to create a dollar tide and then harvest other countries' assets. At the same time, in the process of the US dollar interest rate reduction cycle, exporting US dollars to the world can also help the world share the inflationary pressure, but this must be based on the premise that everyone is willing to use US dollars. If all countries start dollarization, the harvest effect of the dollar will be weakened, which of course the United States does not want to see.
Finally, since the US dollar and euro account for such a high proportion in international payment, is there any way to increase the proportion of RMB in international payment?
It depends on why countries mainly use dollars. In addition to the well-known direct causes of the gold dollar and petroleum dollar system, the important thing is comprehensive national strength. For example, there are goods in the United States that we have to use, and people only accept US dollars for trading if they want to buy them. Then we have to find ways to earn US dollars in foreign exchange, so that we can buy what we want through US dollars in foreign exchange, which will increase the proportion of US dollars in international trade payments, because everyone wants to use it, which is actually euros. Therefore, the best way to increase the proportion of RMB in international payment is to improve the comprehensive national strength, especially the scientific and technological strength. When we have the confidence to ask each other to buy our goods and use RMB, the RMB can gradually expand to the whole world.