Yuan Oil Futures to Start Trading

[jhungary]

Their entire oil imports are about 120 billion dollars annually. I see your point about printing Yuan to purchase oil will cause inflation but it is less than 1% of their money supply. They should be able to absorb those inflationary pressures quite easily. Plus they can issue bonds internally until they have mechanism in place to set up a global bond issue. For that they would have to loosen their control of Yuan and make it free floating which is a definite NO for now.

Regarding China financing the US debt, how long do you think it will go on?? As a US citizen myself I am tired of this dependency on China.

Their's only 120 billions, but if you are talking about oil future trading, they are not just dealing with buying, but also selling, and also other countries and corporate will buy/sell oil using the Chinese Oil Future, which mean they are going to have to back a number more than 120 billions. And if they are doing a oil future for just 120 billions worth of business, then their oil future is doomed to begin with. Consider this, US OPEC recycle rate (is at 1250 billions (1.25 trillions) annually in 2015/2016....120 billions is nothing and won't change anything.

You still not aware of the conundrum, if the amount is too small and China can absorb easily, that won't be able to change anything. But if that is too big, then China cannot digest it and basically it will bring down Chinese Economy.

Also, domestic US consumption is the biggest debtor to the US National Treasure Bond, China accounted for 1.2 trillions out of the 21 trillions the American are owing at no time US National Debt are depending on the Chinese. And until the day the world stop using USD to trade, USD will continue issue bond to foreign nation, and as I stated, the only way now this could happen is either have another world war and we build the world financial system on a different currency, or the world issue a global currency the world would use, but that have to have US support.

China's yuan comes from consumers of oil When you drive in China, don't you use renminbi to buy gasoline? ? ? These renminbi enter into Petro-China, CNOOC, Sinopec, and then these renminbi are paid to Saudi Arabia ，Russia, Venezuela, Nigeria, UAE, Kuwait, and Sudan，etc. These countries then use their renminbi to purchase Chinese products（ Tools, Automobiles, Electronics, etc.) 。Then China's renminbi exported to foreign countries once again returned to the hands of various Chinese companies, and then began a new cycle again.

No.

To do what you said, you need EVEYR COUNTRY using the shanghai oil future to use RMB to do everything (Not just buy oil). They will buy your oil (Which China does not produce much for foreign use) in RMB and you trade it back with other currency. But Saudi Arabia will use their Riyal, Nigeria will use their Naira, Russia will use their Rupee. And even if they uses RMB for everything, where does those RMB come from? They would be from China Central bank, unless you allow Saudi, Russia or Nigeria to print RMB in their country.

The thing is, they don't, you can probably ask Russia to do that (But with their broken economy, how much they can sustain in this rate?) And if China import more than export, then regardless what the other do, China have to back the RMB used in the Trade and I want to know where these money comes from?

Money cannot be printed without a recycling process, So either they will need to have extra RMB China print and exchanged somehow or China have to print more money to back the whole future, or taking an easy way is to use a 3rd currency as a sort of escrow, guess what, that is what the Chinese Government are doing, and they are using USD.

 

[Dai Toruko]

Who is going to accept yuan? If Yuan is fully convertible with Gold, it means oil will be paid in terms of gold. As a result price of gold will go up and up. Everyone has to pay more and more for gold which is good for Russia and Saudi Arabia.However, future contracts mean the gold price will be kept low according to these contracts. Thus, it is another Chinese trick.

 

[Viet]

Their's only 120 billions, but if you are talking about oil future trading, they are not just dealing with buying, but also selling, and also other countries and corporate will buy/sell oil using the Chinese Oil Future, which mean they are going to have to back a number more than 120 billions. And if they are doing a oil future for just 120 billions worth of business, then their oil future is doomed to begin with. Consider this, US OPEC recycle rate (is at 1250 billions (1.25 trillions) annually in 2015/2016....120 billions is nothing and won't change anything.

You still not aware of the conundrum, if the amount is too small and China can absorb easily, that won't be able to change anything. But if that is too big, then China cannot digest it and basically it will bring down Chinese Economy.

Also, domestic US consumption is the biggest debtor to the US National Treasure Bond, China accounted for 1.2 trillions out of the 21 trillions the American are owing at no time US National Debt are depending on the Chinese. And until the day the world stop using USD to trade, USD will continue issue bond to foreign nation, and as I stated, the only way now this could happen is either have another world war and we build the world financial system on a different currency, or the world issue a global currency the world would use, but that have to have US support.



No.

To do what you said, you need EVEYR COUNTRY using the shanghai oil future to use RMB to do everything (Not just buy oil). They will buy your oil (Which China does not produce much for foreign use) in RMB and you trade it back with other currency. But Saudi Arabia will use their Riyal, Nigeria will use their Naira, Russia will use their Rupee. And even if they uses RMB for everything, where does those RMB come from? They would be from China Central bank, unless you allow Saudi, Russia or Nigeria to print RMB in their country.

The thing is, they don't, you can probably ask Russia to do that (But with their broken economy, how much they can sustain in this rate?) And if China import more than export, then regardless what the other do, China have to back the RMB used in the Trade and I want to know where these money comes from?

Money cannot be printed without a recycling process, So either they will need to have extra RMB China print and exchanged somehow or China have to print more money to back the whole future, or taking an easy way is to use a 3rd currency as a sort of escrow, guess what, that is what the Chinese Government are doing, and they are using USD.

most of future contracts as puts or calls are for speculation purposes aka betting on rising or on declining of prices of underlying asset, be it oil or gas or everything else. from the $120 billion worth of contracts, buyers or sellers just spend a tinny sum to buy put or call contract with a predefined end time, usually 1 percent, that means only $1.2 billion in real money per day are changing hands.

from traders, probably only 5 percent of buyers or sellers have to do with real economy. the rest have more interest in casino than in oil. I worked for a stock exchange for a while.

by the way, welcome back

Who is going to accept yuan? If Yuan is fully convertible with Gold, it means oil will be paid in terms of gold. As a result price of gold will go up and up. Everyone has to pay more and more for gold which is good for Russia and Saudi Arabia.However, future contracts mean the gold price will be kept low according to these contracts. Thus, it is another Chinese trick.

CN economy is huge and real, it makes sense to accept Yuan. similar to accepting of Yen or Euro or Dollar. Gold is limited in resources, can´t be produced. it makes sense to put some money in Gold though. I would not buy Lira.

 

[Dai Toruko]

CN economy is huge and real, it makes sense to accept Yuan. similar to accepting of Yen or Euro or Dollar. Gold is limited in resources, can´t be produced. it makes sense to put some money in Gold though. I would not buy Lira.

China imports 116 billion dollars worth of oil a year. Can you take delivery of your gold and take it out of China? If you can it will flood the world market with gold dropping its price but oil will still be priced in US dollars because you can buy and sell gold for US paper dollars and take it out of the country. But as I understand China's gold and silver laws you can't take out more than you brought in which you have to declare at customs when you enter China. If this is true then the petroyuan is a total scam, a fraud.

 

[Viet]

China imports 116 billion dollars worth of oil a year. Can you take delivery of your gold and take it out of China? If you can it will flood the world market with gold dropping its price but oil will still be priced in US dollars because you can buy and sell gold for US paper dollars and take it out of the country. But as I understand China's gold and silver laws you can't take out more than you brought in which you have to declare at customs when you enter China. If this is true then the petroyuan is a total scam, a fraud.

it is absurd to pay oil in Gold. there isn´t enough Gold in the world. consider this: Russia has 2,000 tons of Gold, worth some $455 billion. How many months or years can you buy oil for the amount of money?

 

[liall]

Petro Yuan is not a scam or a fraud. It is a serious challenger to petro dollar. In a way China can force Saudis to trade in Yuan because they have become the biggest buyer of oil. China has the advantage here and US has become a net exporter of oil, so US has lost the power that it had in 70s to force petro dollar on every one.

USA enjoys a standard of living more than it should because of Petro dollar. Petro Yuan will change that and there is nothing that can be done about it. Petro Yuan is the future from I say 2025 till at least 2050s after which I guess petro will lose its significance anyway.

 

[jhungary]

most of future contracts as puts or calls are for speculation purposes aka betting on rising or on declining of prices of underlying asset, be it oil or gas or everything else. from the $120 billion worth of contracts, buyers or sellers just spend a tinny sum to buy put or call contract with a predefined end time, usually 1 percent, that means only $1.2 billion in real money per day are changing hands.

from traders, probably only 5 percent of buyers or sellers have to do with real economy. the rest have more interest in casino than in oil. I worked for a stock exchange for a while.

by the way, welcome back

lol, what you are describing is the client side of the business, it's more or less like the bank, where people have their money and deposit and withdraw and some may buy into their share and service and while 90% of all Banking client is the small fish like you and me where a day transaction is no more than $1000 and only 10% of their client are big fish and not all of them uses their service everyday.

The problem is, the future trust still have to guarantee and back the future trading, even tho many people are of small transaction, and the big fish did not come by everyday, and that would mean you will need more than said value to back the future trading, which mean you still need to have necessary funding at hand if you are the house.

Which mean China would still need to back its oil future and that is what I was referring to.

Petro Yuan is not a scam or a fraud. It is a serious challenger to petro dollar. In a way China can force Saudis to trade in Yuan because they have become the biggest buyer of oil. China has the advantage here and US has become a net exporter of oil, so US has lost the power that it had in 70s to force petro dollar on every one.

USA enjoys a standard of living more than it should because of Petro dollar. Petro Yuan will change that and there is nothing that can be done about it. Petro Yuan is the future from I say 2025 till at least 2050s after which I guess petro will lose its significance anyway.

you do know USD currency dominance is not because of the 2 trillions trading a year oil business, right? USD is the world dominant currency because it occupied 89% of the 5.7 Trillions dollar a DAY currency trade, in case you are wondering, that's about 2000 trillions a year.

Petrol Yuan will not change anything and the only thing it does is for China to rely more on USD, as you can see their Holding of US national debt have increased by 10% between 2017 to 2018 (from 1.08 trillions in Jan 2017 to about 1.2 trillions in Jan 2018), and the more they want to internationalize Yuan, the more they will have to depend on US Dollar.

 

[liall]

you do know USD currency dominance is not because of the 2 trillions trading a year oil business, right? USD is the world dominant currency because it occupied 89% of the 5.7 Trillions dollar a DAY currency trade, in case you are wondering, that's about 2000 trillions a year.

Petrol Yuan will not change anything and the only thing it does is for China to rely more on USD, as you can see their Holding of US national debt have increased by 10% between 2017 to 2018 (from 1.08 trillions in Jan 2017 to about 1.2 trillions in Jan 2018), and the more they want to internationalize Yuan, the more they will have to depend on US Dollar.

Most of the oil buying nations pay for Oil in Dollars and what do these Saudis do with their dollars? Buy US treasury bills and bonds. Petro Yuan alone wont destroy USD dominance but it will for sure put a dent in it. Any slump in customers for US treasuries will force cuts in US spending and people wont like it.

 

[jhungary]

Most of the oil buying nations pay for Oil in Dollars and what do these Saudis do with their dollars? Buy US treasury bills and bonds. Petro Yuan alone wont destroy USD dominance but it will for sure put a dent in it. Any slump in customers for US treasuries will force cuts in US spending and people wont like it.

2 things you did not factor in for your point.

1.) Saudi did not own much US treasury Bond. As of 2018, it held less than 150 billions US Treasure Security.
2.) What Saudi lost on US Treasury bond would easily be picked up by the Chinese, in fact, Chinese bought more just the last year then total Saudi Held over all time.

You can take Petrol Dollar out and it would not dent the US Currency one bit, you need another economic eco-system that held internationally to be able to take down the USD, and to do that, you will need a super currency that's greater than any country that can afford. And I don't see any country (China and Russia included) are running in that direction. All these Future Trading and Currency agreement is created so that China and Russia can earn more money, rather than aiming at toppling USD, as I explained, in fact, doing these will make China and Russia depend on US more and more.

 

[Kiss_of_the_Dragon]

The jews control the macro level... the laws, regulations, big business, etc while the chinese control the micro level.. factories, back stabbing friends/coworkers, stealing intellectual property, stealing jobs, etc.

So between these two, they are slowly taking over not just the US but the whole world.

You should know by now that the commonality between Chinese and Jew is $$$$ & business, before the fall of Ching empire, we're world first economy...people label Chinese as oriental Jew not without reason, for the rest of your crap keep it for yourself.

 

[Dai Toruko]

You should know by now that the commonality between Chinese and Jew is $$$$ & business, before the fall of Ching empire, we're world first economy...people label Chinese as oriental Jew not without reason.

The culture of Qing people and Korean people is almost the same. And language is similar.
Therefore, Qing history is Korean history. And 1st Emperor "Nurhaci" is Korean.(Goguryeo).

 

[Kiss_of_the_Dragon]

The culture of Qing people and Korean people is almost the same. And language is similar.
Therefore, Qing history is Korean history. And 1st Emperor "Nurhaci" is Korean.(Goguryeo).

Well the culture of Turk is even closer to Han than Anatolians, therefore Turkey history is in fact Chinese history, if you really are Turkish descendant then you're our blood related cousin If not, you probably are Greek cousin or whoever's cousin.

 

[mohd497]

it is absurd to pay oil in Gold. there isn´t enough Gold in the world. consider this: Russia has 2,000 tons of Gold, worth some $455 billion. How many months or years can you buy oil for the amount of money?

What are your forecast of yuan as a currency? Will it value increase or will it decrease? After oil futures in yuan.

 

[Viet]

lol, what you are describing is the client side of the business, it's more or less like the bank, where people have their money and deposit and withdraw and some may buy into their share and service and while 90% of all Banking client is the small fish like you and me where a day transaction is no more than $1000 and only 10% of their client are big fish and not all of them uses their service everyday.

The problem is, the future trust still have to guarantee and back the future trading, even tho many people are of small transaction, and the big fish did not come by everyday, and that would mean you will need more than said value to back the future trading, which mean you still need to have necessary funding at hand if you are the house.

Which mean China would still need to back its oil future and that is what I was referring to.



you do know USD currency dominance is not because of the 2 trillions trading a year oil business, right? USD is the world dominant currency because it occupied 89% of the 5.7 Trillions dollar a DAY currency trade, in case you are wondering, that's about 2000 trillions a year.

Petrol Yuan will not change anything and the only thing it does is for China to rely more on USD, as you can see their Holding of US national debt have increased by 10% between 2017 to 2018 (from 1.08 trillions in Jan 2017 to about 1.2 trillions in Jan 2018), and the more they want to internationalize Yuan, the more they will have to depend on US Dollar.

No, China does not need to back the futures. that is the business between buyer and seller. Buyer and seller must have a future account, where they put collaterals equaling to the worth of the contracts they signed.

What are your forecast of yuan as a currency? Will it value increase or will it decrease? After oil futures in yuan.

ha ha if I knew how the Yuan will develop in the future I will become rich

my personal prediction: Yuan will increase in value against the US dollar. several reasons: China current account surplus will remain for a forseenable future, with exports higher than imports, with the US government´s tendency to devalue the Dollar to support the exports and ease the trade deficit. However you need 2 to tango: the Chinese government will try to stop the Yuan to rise too fast, otherwise the exports will suffer. Look at the chart: I expect the Yuan will break the 6,00 mark in 1 or 2 years.

 

[mohd497]

No, China does not need to back the futures. that is the business between buyer and seller. Buyer and seller must have a future account, where they put collaterals equaling to the worth of the contracts they signed.


ha ha if I knew how the Yuan will develop in the future I will become rich

my personal prediction: Yuan will increase in value against the US dollar. several reasons: China current account surplus will remain for a forseenable future, with exports higher than imports, with the US government´s tendency to devalue the Dollar to support the exports and ease the trade deficit. However you need 2 to tango: the Chinese government will try to stop the Yuan to rise too fast, otherwise the exports will suffer. Look at the chart: I expect the Yuan will break the 6,00 mark in 1 or 2 years.

View attachment 463117

Thanks. I know how much difficult it is to predict the currency future. It is well almost impossible. I just have a gut feeling this time China will not hold back Yuan since it is actively pursuing to be a consumer economy rather export oriented. There were stress test too to find impact on export industry with rising Yuan. Let's see let's see.