Petrodollar Versus Petroyuan

Chinese General Secretary Xi Jinping’s trip to Saudi Arabia in December may prove to be the trigger of a seismic shift in international trade. During the visit, Xi attended a meeting of the Gulf Cooperation Council and signed a strategic partnership agreement on December 8 with Saudi Arabia. China plans to increase its energy imports from the region and pay in yuan. The agreement undermines the dollar as the world’s reserve currency and the United States’ role in geopolitics. National Interest noted on January 3 that his trip “set off a storm of anxiety in Washington.”

A seismic shift: “China wants to rewrite the rules of the global energy market,” noted Credit Suisse analyst Zoltan Pozsar, according to the Financial Times. Recent events may mark “the birth of the petroyuan,” he told his clients. Most countries use the U.S. dollar as the primary currency for the international trade of oil. The foundation for the so-called “petrodollar” was laid in 1945, when U.S. President Franklin Delano Roosevelt met Saudi King Abdul Aziz Ibn Saud. At the time, trust in the U.S. economy and military power was high. The Financial Times wrote:

It was the beginning of one of the most important geopolitical alliances of the past 70 years, in which U.S. security in the Middle East was bartered for oil pegged in dollars.

But times change, and 2023 may be remembered as the year that this grand bargain began to shift, as a new world energy order between China and the Middle East took shape.

Dethroning the dollar: China has formed an alliance with the brics countries (Brazil, Russia, India, China and South Africa) and other parts of the world to encourage decoupling from the dollar. Saudi Arabia’s partnership with China could greatly accelerate this trend. If demand for dollars declines, the currency will depreciate and the U.S. won’t be able to borrow money at low interest rates. Given the nation’s astronomical debt, the consequences would be catastrophic. It would also mean that the U.S.’s ability to enforce economic sanctions would decline.

Geopolitical consequences: Saudi Arabia has for years put its trust in the U.S. while Iran has looked to China and Russia. But Saudi Arabia is losing trust in the U.S., so it is willing to enter an agreement with China to preserve the balance of power in the Middle East. This will diminish the U.S.’s power in the region.

The U.S. isolated: Numerous prophecies show that the U.S.—one of the main descendants of ancient Israel—will be isolated in the end time. Isaiah 23 prophesies of a trade alliance led by Europe and China that will work against the U.S. Psalm 83 prophesies a geopolitical alliance that includes Europe and Saudi Arabia that will seek nothing less than the destruction of the modern nations of Israel. Bible prophecy reveals that an economic war against the U.S. will be followed by a military invasion. The stage for these previously impossible events is now being set.

To learn more, request a free copy of our booklet Isaiah’s End-Time Vision and read “America Is Being Besieged Economically,” by Gerald Flurry.