Trump Officially Declares Trade War on China Days Before Launch of Petroyuan

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D-Day for the US Dollar: China’s Petroyuan oil futures contracts to be issued from 26th March 2018.

Between 1944 and 1971, the international monetary system, known colloquially as the Bretton Woods System, revolved around the gold backed US Dollar. Whether in Africa or Asia, a US Dollar was literally as good as gold, because it was pegged to and therefore could be converted to gold anywhere in the world. Then in 1971, US President Richard Nixon made the decision to un-peg the US Dollar from a gold standard, thus transforming the world’s major currency into a floating fiat currency.

In order to maintain the Dollar’s position as the world’s leading currency, the US reached an agreement with the leaders of OPEC, Saudi Arabia in particular, to sell oil exclusively in US Dollars, irrespective of who the buyer was.

This system remained largely unchallenged until the the arrival of a non-Dollar based economy, China, as the new leading economic power of the world, whose GDP will soon eclipse that of the US. Already, China purchases more oil than any other country in the world, in spite of its increased domestic energy production and furthermore, China now has the world’s highest purchasing power of any nation on earth. Even before oil became the highly valued commodity it became in the 20th century, the nation with the largest economy and more importantly, the largest and most wide reaching purchasing power, has traditionally set the bar for their own currency becoming the de-facto global currency of exchange and the most pervasive reserve currency for global treasuries.

Western-aligned states will shift to Eastern alignment.

For China and China’s partners this means that they will be able to set the terms of major international trade deals. For OPEC, it means intensifying discussions with China and China’s long term partners, as opposed to the US and its long term partners. This means that even traditional US allies like Saudi Arabia will begin looking to open new doors with China in preparation for an oil export market that will see banknotes featuring images of Mao Zedong supplant those with images of George Washington.

This will have a knock on-effect in geopolitics, making the richest countries in the Arab world, particularly those in the Gulf Cooperation Council, less attached to US foreign policy making. If China becomes their biggest trading partner and if the trade is conducted in the Petroyuan, it will be China whose geostrategic goals will be able to hold sway in the court of Gulfi Arab monarchies rather than the whims of Washington. Already, Saudi Arabia has begun courting China, likely in order to attract investment for its new megaproject, the creation of a massive new city on the Gulf of Aqaba.

U.S. sanctions will lose their effectiveness.

The Petroyuan will also help to render US Treasury sanctions far less effective, as countries whose global trade is linked in with Chinese monetary and trade policies, will be out of the loop of the US Dollar based system. This represents new opportunities for countries as diverse as Syria, Venezuela, Iran and if the right conditions are met from Beijing’s perspective, also the DPRK.

While Washington denies that its Federal Reserve system is now the biggest basis for its continued, however waning international influence, the fact that US political leaders are openly horrified by the arrival of China and its Petroyuan, is a prima facie admission that while China has industry, innovation, military might and is on the cusp of edging the Dollar out as the world’s leading reserve and trading currency, soon the US will have little but military might to show for its superpower status and given how expensive this military might is for the US, the changes in world monetary markets, could also impact America’s ability to invest in its own military-industrial complex.

The myth of an “undervalued” Yuan.

Of course, the US accuses China of purposefully undervaluing the Yuan so as to make Chinese exports more affordable and thus attractive. What the US hasn’t considered is that when the Yuan becomes the de-facto global reserve currency, it’s floating rate will likely be higher than that of the US Dollar. In this sense, the lesson for the US is “be careful what you wish for” and the lesson for China is that if the US seeks to shut Chinese goods out of the US market with tariffs, sanctions or even embargoes – then China has nothing to lose by floating the Yuan and letting the Dollar’s value sink vis-a-vis the Yuan.

China is in a win-win position vis-a-vis the US Dollar, while for the US, Washington and Wall Street will have to examine how major European currencies coped in the post-Bretton Woods and pre-Euro period. Ultimately, the only way the US will be able to cope in such an environment is to invest more into domestic production in order to regenerate confidence in a Dollar whose value will have to be based on what America does, rather than what America was. While technically the US still is a monetary leader, when the Yuan inevitably eclipses the Dollar, the US will have to get used to the word was in respect of global hegemonic monetary dominance. Much to the relief of millions, the US will no longer be able to peddle the lie that US hegemony is due to a somehow superior political and social system. The reality that US hegemony is based on the accepted value of the Dollar will be starring the US, its allies and its adversaries in the face like an emperor without clothes.


As China takes a decisive economic step away from the dollar; the international bankers move in.

Now, in the run up to the launch of the Chinese Petroyuan on March 26th 2018, U.S. President Donald Trump is declaring economic war on China on the behalf of international banking interests.

Protectionism has its time and place and this is usually in a newly industrializing nation that has not yet reached its peak output.

When countries like Britain, the US, Germany, Japan and China began their unique and highly notable industrial revolutions, they did so under the cover of protectionist policies. In this sense, as a nation develops an industrial base, in order to reach the zenith of development, it is important not to rest on someone else’s laurels in the form of easy imports. Protection turns the industrializing nation into an industrial island, thus testing the limits of self-sufficiency in terms of industrial development and the development of an internal market.

This is exactly what is happening, a second planned industrial revolution — a shift away from Tertiary and Quaternary imbalanced economies back to the industrial roots that will make the West once more a major economic contender.

Once such a revolution reaches a comfortable level of self-sufficiency, a protectionist economy has reached maturity and is ready to test the waters of free trade.

In the short to mid-term, the Globalists are promoting an artificial divide of trade protectionism, pursuing a split between Western and Eastern exchange in a bid to isolate China and its partners, Trump’s latest sanctions are one facet of this, for example; artificially inflating the price of Chinese goods to stimulate confidence in domestic economies. Protectionist blocs and trade agreements such as the EU are at the forefront of these protectionist efforts to sever ties with non-Globalist economies.

In the longer term, Globalist agents seek to boost the third world population of Europe to create a low-paid, manufacturing powerhouse to challenge China, as well as shift manufacturing and industry back to Western soil to reduce dependencies on non-Western imports and diversify Western import-reliant economies.

To successfully do this, they must eliminate or reduce the majority Western white middle class that demands higher wages and tends to avoid work in laborious, low-pay jobs.

This is something they are actively pursuing by promoting the migrant crisis, promoting anti-nationalism, promoting white-guilt, and the racism hysteria, all intended to ‘water-down’ the West and give emphasis to a more lucrative, lower IQ, third world population.

Many economists call the sanctions ‘damaging’ for both economies, but that’s the point, that the West is filing for a near total divorce from the economies of the non-Globalist variety, this is just the beginning.

New Tariffs.

Trump has signed a Section 301 Action of the 1974 Trade Act, authorizing the implementation of new wide reaching tariffs covering the import of a wide variety of Chinese goods into the United States, with an emphasis on barring Chinese technology and technology investment from the US market. Trump also threatened to take further action against alleged intellectual property rights violations in China. During his speech he also threatened the European Union, Japan and South Korea, but most of his ire was aimed at China. Where weeks ago it was suggested that the US would pass $30 billion worth of tariffs on Chinese goods, today Trump doubled the figure to $60 billion. By invoking the Trade Act of 1974, Trump has bypassed the Congress to take unilateral action in a trade war that most of the Congress and the US Chamber of Commerce does not support.

Donald Trump reaffirmed that while the new measures will be implemented immediately, he will be willing to negotiate with all parties, including China regarding establishing what he calls a better trade balance. He even suggested that the countries whose goods he is slapping new tariffs on would welcome the move because they were “taking advantage” of the US for years. In reality, China, South Korea, the EU, Canada and others have already strongly criticised Trump’s reactionary approach to trade.

It beggars belief that Trump purposefully held off on attempting to negotiate new trade deals until after ordering tariffs which have a punitive effect on both America’s trading partners and the American tax payer. This kind of bullying of powerful nations will if anything, make countries less likely to negotiate a favourable deal in the future. Rather than use tariffs as a last resort after a respectful negotiating process, Trump has decided to use tariffs as a means of blackmailing other nations. The US will now learn the hard way, that there are many markets for goods other than the US market. If anything, this will enforce China’s decision to sell-off even more US Treasury bonds in preparation for a larger divestment of assets from the US, which itself is a requisite to the Yuan detaching its value from the Dollar and floating freely on global currency markets. A floating Yuan was always a matter of ‘when’ rather than ‘if’. Trump’s zero-sum attitude has now made the question of ‘when’, a matter of ‘sooner rather than later’. The result will be less investment in the US economy which means fewer jobs, combined with a weakening dollar which means less purchasing power for both US companies and US consumers. Trump’s move has made this reality all the more inevitable.

When signing the executive order, he claimed “This is only one…it is the first of many”. The markets are likely to respond negatively to this development, but in the medium term, Trump’s move could usher in a pivot away from the US on the part of wider international trading, including in the all important areas of currency and energy commodities markets.

On the 26th of March, China will formally introduce the Petroyuan. The issuing of oil futures contracts in China’s national currency looks to threaten the long term efficacy of the Petrodollar – something the US has used to artificially inflate the value of its currency ever since Richard Nixon detached the Dollar from a gold standard in 1971.

With the US failing to produce desirable quality goods as efficiently as other major industrial powers, Washington has resorted to a combination of tariffs and sanctions as its only remaining weapons to try and inflect economic harm on other nations. Just as sanctions have not caused any significant damage to the Russian economy, so too will China which now has the most powerful internal market in the world, not suffer from Trump’s tariffs, certainly not as much as American businesses and consumers. China’s rapid expansion into new global markets combined with its own continually growing internal market, will rapidly compensate for losses in terms of exports to the US.

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