China is ditching the dollar. The world's abandonment of the dollar in favor of the gas-yuan-gold scheme proposed by Russia and China will lead to the collapse of the United States. Red light to green

MOSCOW, November 8 - RIA Novosti, Alexander Lesnykh. Deputy Prime Minister Yuri Borisov said that India will pay for the delivery of S-400 Triumph anti-missile systems in rubles. China is not lagging behind: according to the head of VEB Igor Shuvalov, an agreement on mutual settlements in national currencies can be signed by the end of this year. What benefit Russia will get from the de-dollarization of foreign trade and who else is ready to join settlements in national currencies - in the material of RIA Novosti.

Red light to green

The biggest and most obvious benefit to both countries when trading in local currencies is that there are no major fluctuations in recalculation.

So, on January 1 of this year, 0.89 Indian rupees were given for the ruble, and after 10 months - 0.88 rupees. The maximum exchange rate for this year is 0.98 rupees per ruble, the minimum is 0.85 rupees. This means that the volatility corridor amounted to 0.13 rubles for the entire year.

For comparison: on January 1, the dollar was worth 57.04 rubles, and on November 1 - already 65.6 rubles. The maximum value this year is 69.9 rubles, the minimum is 55.6 rubles. Volatility corridor - 14.3 rubles. The difference in this indicator between the ruble / dollar and ruble / rupee pairs turns out to be fabulous - 11,000%.

Another equally important problem in settlements through the American dollar is the high probability of sanctions, which Washington is distributing this year to the right and to the left.

In April, Indian media reported that Delhi's financial institutions froze about $ 2 billion allocated to pay for critical projects, including the repair of the nuclear submarine Chakra (Project 971 Schuka-B) rented from Russia.

The reason is that the White House included Rosoboronexport on the sanctions list. For credit and financial organizations, this actually means a ban on any settlements in US currency.

But, as practice shows, the world is no longer taking Donald Trump's threats seriously. India has chosen to maintain relations with the most reliable partner in the field of military-technical cooperation and the supply of weapons - Russia.

According to the Stockholm Peace Research Institute (SIPRI), Russia supplied $ 24.5 billion worth of weapons to India from 2007 to 2017. USA - only 3.1 billion.

And Russia's trade with India is not only about arms supplies, the volume of which in 2017 amounted to about $ 1.9 billion (against the background of a total trade turnover of $ 9.1 billion). According to Borisov, it is possible to pay for civilian products in national currencies.

“Today, the share of settlements in rubles on exports is 20%, on imports - about 21%, - said the Russian Deputy Prime Minister. - This is a good indicator, but, nevertheless, we will increase settlements in national currencies as a means to solve the problem of non-payments. This also applies to contracts for military-technical cooperation. "

It unites not only Cupid

Another excellent news for Moscow on the same topic came in early October from the head of Vnesheconombank (VEB) Igor Shuvalov. The top manager said that Russia and China have their own channels for interaction, adding that in the current situation, Beijing is also interested in using them.

"We understand how this scheme should work, it should be described in the agreement. The Chinese side is no less, and perhaps more interested, as it was announced yesterday by the PRC President, that such an agreement be signed as soon as possible." , - Shuvalov informed the journalists about the results of intergovernmental negotiations.

The banker specified that in the coming weeks, bilateral consultations will take place, during which it is necessary to finally decide how the interaction between the financial institutions of both countries will take place and who will take on the role of the authorized operator in Moscow and Beijing.

An important anniversary was celebrated in Beijing yesterday on a grand scale: 40 years have passed since the start of Chinese economic reforms and the policy of "opening up to the world." It was this openness, the willingness to learn from the West without copying it, the willingness to undertake unpopular but necessary reforms, as well as the most serious injections of American capital aimed at turning China into an effective counterbalance to the late Soviet Union, that became the key to the Chinese economic miracle.

Part of the American elite looks at today's China through the prism of a rather offensive thesis for the Chinese: "I gave birth to you, I will kill you," in the sense that, since the Chinese economic miracle became possible due to the export of Chinese goods to the West, due to the transfer to China of American technologies and due to the high level of direct American investments, it means that if all of the above is blocked, China will collapse like a house of cards. The optics and logic of American sinophobes are based on the fact that the current strong China is a historical aberration that can and must be corrected.

It is not for nothing that the Trump administration's chief trade negotiator, Robert Lighthizer, is pushing for China to abandon the import substitution program and the development of Chinese high-tech manufacturing - "Made in China 2025".

The US wants to return the country to a "cheap assembly shop" position for US companies. Judging by the rhetoric of official Beijing, the view of the most influential (one might say, healthy nationalist) part of the Chinese political elite on their own country comes from completely different premises: according to their version, the humiliation and weakness of their state, which was most clearly manifested in the era of the opium wars, and also widespread poverty before the beginning of the era of reforms are historical aberrations, and the natural state of China is the most powerful power and the world pole of power.

Chairman Xi's speech, dedicated to the anniversary of the beginning of reforms, was perceived by many Western observers as a kind of litmus test, as a kind of indicator of which path the country intends to take in the near future. Amid negotiations with Donald Trump, after which some media exploded with enthusiastic headlines with a general meaning

"China surrendered in a trade war," some expected that the Chinese leader's keynote speech would be used to covertly explain to fellow citizens the need to end the trade war (that is, de facto surrender) and increase the openness of the Chinese economy. Or at least the Chinese rhetoric was supposed to move into a more conciliatory register. No conciliatory tone was recorded. President Xi offered his fellow citizens and the world a completely different basic message: "No one is in a position to dictate to the Chinese people what can and cannot be done," he stressed in his speech.

The Qatari al-Jazeera correspondent writes that “the reason everyone followed Xi's speech so closely was because they were looking for hints of the concessions he was willing to make in order to ease the trade conflict with the United States. ,

Chairman Xi’s speech cannot be called shabby-handed - it contains a sober indication that “all kinds of risks and challenges are ahead.” During the speech, Asian stock markets were falling - investors realized that China did not buckle under Trump's pressure, which means that tariffs, trade restrictions, arrests of Chinese businessmen wherever the American special services can reach them, and other events that do not contribute to optimism of financial tycoons.

At the same time, it should be noted that the hopes of those who pointed out the likelihood of China returning to the most radical economic and political practices of the Mao era as a mobilization response to external challenges and an instrument of maintaining power by the Chinese Communist Party did not come true. On the contrary, as the business publication Caixin rightly points out, in his speech, Chairman Xi stressed that the market will play a key role in the allocation of resources in the country's economy. This can be interpreted as an indication that China is not going to abandon the positive experience of using market mechanisms just because relations between Beijing and Washington have deteriorated greatly.

Apparently, in order to emphasize this "pro-market" position of the CCP, one of the honorary awards presented on the occasion of the "anniversary of reforms" went to billionaire Jack Ma, around whom a serious scandal recently erupted over his membership in the Communist Party of China: on the one hand Western investors in Jack Ma's Chinese companies did not know how to "digest" the news that the most famous Chinese entrepreneur was the holder of a red party card, and on the other hand, there were also critics for the party that accepted the billionaire into its ranks.

In a way, the case of the "billionaire communist" Ma is the embodiment in one person of the entire contradictory history of Chinese reforms: the combination of what it would seem impossible to combine gives an interesting and unexpected result.

"Socialism with Chinese characteristics" is an enigmatic phenomenon for many foreign analysts, which is the essence of China's economic success. And this is the main reason why, despite external pressure (and even a certain discontent that is recorded by foreign observers among the governing elite), the Chinese leadership is not going to change its economic and political course.

In his speech, President Xi tried to "reach out" to Washington and explain that Beijing is not trying to become a "world hegemon." Like Russia, China requires the United States to be left alone and not interfered with its development. Unfortunately, judging by the logic of the current Washington leaders, the very idea that someone just wants to develop and successfully compete with the United States in the global economy is already perceived as a threat to American national interests and American national security. This means that China will be "pressed" by economic, diplomatic and, possibly, even military methods.

The reason is his success, but there will always be a reason.

He announced the submission of a plan to de-dollarize the country's economy to the government. How far can this process go? Should the population flee to withdraw their foreign exchange savings from banks? And will the de-dollarization of Russia cool the ardor of American sanctioners if others join our country in rejecting the dollar in international settlements?

On the eve of the submission to the government of the plan to "abandon the dollar", President Vladimir Putin indirectly spoke about this at the Russian Energy Forum, noting that the United States was making a big strategic mistake, undermining confidence in the dollar as a reserve currency.

“They are really sawing the branch they are sitting on,” he remarked and added that this behavior (obviously referring to self-confidence in their actions) is typical for any empire.

By the way, one can agree with the latter. And although now, even despite a colossal debt of $ 22 trillion, the United States still enjoys global trust as the main and most reliable borrower, who knows what will be with this trust in 3-5-10 years. After all, signs that it is precisely the "imperial" behavior of the United States, and even in the "savory" performance of Donald Trump, is beginning to annoy even their closest allies (for now, albeit on trifles), are already periodically manifested. It is also known about empires that their decline begins at the moment of their highest prosperity.

The current self-confidence in the long run can really backfire on the United States. Especially when new "rival empires" - China, Europe, grow up, and then we'll see.

The time of the announcement of the de-dollarization plan - as if in a mockery - coincided with a new noticeable weakening of the ruble, which, together with the Russian market, only recovered from the "sanctions shock". This weakening was also prompted by another series of "spy thrillers", in which the Netherlands accused Russia of hacker attacks on the Organization for the Prohibition of Chemical Weapons, revealing the details of an operation carried out back in April this year, when four Russian citizens with diplomatic passports were expelled. An information wave immediately arose around "the next terrible intrigues of the Russian GRU": Britain accused Russia of "undermining the world order", the US Justice Department brought charges against seven "military intelligence officers" interference in the US elections, some of this group appear in the Dutch case), calling them involved in cyberattacks on the OPCW, WADA, the investigators of the Malaysian Boeing crash, as well as the Westinghouse company, which operates in the field of nuclear energy.

However, it was not only and even not so much the sanctions risks (to which the market had already become partly accustomed) that caused the ruble to fall on Thursday. The ruble simply fell “in company” with the currencies of other emerging markets (the Turkish lira fell more) amid a strengthening dollar, an increase in US government bond rates, as well as the temporary withdrawal from the market of Russian exporters, who had been actively buying rubles to pay taxes.

In Russia, they have been talking about de-dollarization for quite a long time, almost all the post-Soviet period, calling it in common parlance "the rejection of the dollar." Even populist rather illiterate bills on this very "complete and final refusal" appeared from time to time.

However, the current intentions are still much more serious. There is no talk of banning the circulation of the dollar.

The course is calculated "for a long time", without providing for sudden movements, and is aimed, first of all, at reducing the risks from abrupt (theoretically possible in the current political conditions) US actions to disconnect our country or some of its banks from dollar transactions, which all pass through correspondent accounts in American banks.

In any case, you do not need to run to the bank to withdraw cash. Not a single banking system can withstand such a raid of depositors (the volume of foreign currency deposits of the population in the first half of the year amounted to a little less than $ 90 billion in dollar terms), so only madmen can take drastic steps here.

Of course, if, say, China, as well as a couple of other large economies, joined our efforts to de-dollarization, the dollar's global hegemony would come to an end.

But along with this, the entire world financial system would collapse, hitting, among other things, the "destroyers" themselves.

In the short and medium term, there is no alternative to the dollar as the world's means of payment. And the same China is placing bonds in dollars, not yuan. He is also the largest foreign holder of American debt and is not going to reduce its share at all (while Russia practically zeroed its volume this year, putting, in particular, on dollar deposits in foreign banks, and it was quickly bought out by other countries, for example, the Saudis ). And despite many years of talk about the desirability and possibility of switching to rubles and yuan in trade with China, up to 80% of our mutual trade turnover is still settlements in dollars.

However, in this case, it is still more important to some extent not the current, quite specific costs of the transition (albeit very limited) in the calculations for national currencies, but a certain new trend. America itself, if it does notice the de-dollarization of Russia, is not because it somehow threatens it economically or financially - no. But because it will show an even greater decrease in the effectiveness of sanctions against our country as a means of influencing its policy and weakening its economy. This will become only one (but we hope not the only) means of adapting the Russian economy to the new conditions.

At the same time, the ability to unconditionally dictate one's will to others is an indispensable quality of any powerful empire. And if this ability is undermined or more and more countries have doubts about it, then this inevitably hits the strength of the currency of such an empire. This is not a prospect for the coming years, of course. It's a long run. And the question is not when its participants will come to the finish line (it certainly exists), but whether all of them will come to it.

Deputy Prime Minister Yuri Borisov said that India will pay for the delivery of S-400 Triumph anti-missile systems in rubles. China is not lagging behind: according to the head of VEB Igor Shuvalov, an agreement on mutual settlements in national currencies can be signed by the end of this year. What benefit Russia will get from the de-dollarization of foreign trade and who else is ready to join settlements in national currencies - in the material of RIA Novosti.

Red light to green

The contract for the supply of S-400 systems to India was signed on October 5 this year during Vladimir Putin's visit to Delhi. Experts estimate it at $ 5 billion. At the rate of the Bank of Russia, this is 331 billion rubles.

The biggest and most obvious benefit to both countries when trading in local currencies is that there are no major fluctuations in recalculation.

So, on January 1 of this year, 0.89 Indian rupees were given for the ruble, and after 10 months - 0.88 rupees. The maximum exchange rate for this year is 0.98 rupees per ruble, the minimum is 0.85 rupees. It means that the volatility corridor amounted to 0.13 rubles for the whole year.

Another equally important problem in settlements through the American dollar is the high probability of sanctions, which Washington is distributing this year to the right and to the left.

In April, Indian media reported that Delhi's financial institutions froze about $ 2 billion allocated to pay for critical projects, including the repair of the Russian nuclear submarine Chakra (Project 971 Schuka-B).

The reason is that the White House included Rosoboronexport on the sanctions list. For credit and financial organizations, this actually means a ban on any settlements in US currency.

According to the Stockholm Peace Research Institute (SIPRI), From 2007 to 2017, Russia supplied $ 24.5 billion worth of weapons to India. USA - only 3.1 billion.

“Today, the share of settlements in rubles for exports is 20%, for imports - about 21%,” said the Russian Deputy Prime Minister. - This is a good indicator, but, nevertheless, we will increase settlements in national currencies as a means to solve the problem with non-payments... This also applies to contracts for military-technical cooperation. "

It unites not only Cupid

Another excellent news for Moscow on the same topic came in early October from the head of Vnesheconombank (VEB) Igor Shuvalov. The top manager said that Russia and China have their own channels for interaction, adding that in the current situation, Beijing is also interested in using them.

“We understand how this scheme should work, it should be described in the agreement. The Chinese side is no less, and perhaps even more interested, since it was announced yesterday by the PRC President, that such an agreement be signed as soon as possible, ”Shuvalov informed journalists about the results of intergovernmental negotiations.

It should be noted that the dynamics of the ruble and yuan rates this year was more similar to the ratio of the ruble to the Indian rupee than the ruble to the dollar. On January 1 of this year, the yuan at the Central Bank rate was 8.74 rubles, and on November 1 - 9.4 rubles. The highest rate of the Chinese currency was recorded at around 10.1 rubles, and the lowest at 8.72 rubles.

Thus, the volatility corridor between the ruble and the yuan was only 1.38 rubles against 14.3 between the ruble and the dollar. As in the case of India, for business this means a reduction in the risk of exchange rate losses.

The volume of mutual trade is also pushing to cancel the settlement in dollars between Moscow and Beijing. Last year, the turnover between Russia and the United States amounted to $ 23.6 billion, and between Russia and China - $ 84.9 billion (a difference of almost 360%).

Moscow, Beijing and Delhi by their example show the world how to get rid of dollar dependence... It is noteworthy that all three countries are the largest emerging economies, while the US has a developed economy. This means that mutual settlements in national currencies open up prospects for other developing economies and can finally rid world trade of dollar hegemony.

Analysts estimate the share of the United States in world GDP at 22%, while the dollar accounts for up to 81% of international settlements, writes Asian Fortune. Given this bias, the process of getting rid of the dollar will not be easy at all, says Zhang Xin, a columnist for the publication. However, the main thing is that the process has been launched, and even European countries are participating in it, the publication says. Countries challenging US hegemony, such as China, Russia and Iran, are trying to de-dollarize, European banks and energy companies are also acting in this direction. But the process of moving away from the dollar will take a long time, because, with the exception of bilateral trade between countries, in international commerce in pricing and mutual settlements, the use of other currencies will lead to additional costs and problems.
The share of US GDP in the world is 22%, the share of the dollar in international settlements is 81%, source - Bloomberg. The dollar, like American military power, is the cornerstone of US postwar hegemony. Talk and rumors about de-dollarization have been going on continuously since the 70s of the last century. In 2014, major players in the Eurasian region, represented by individual states and corporations, brought this process to a new level. Now there is a group of countries that have real opportunities to finally get away from the use of the American currency. Among these countries, Russia is the most willing to use such rhetoric. The ongoing escalation of events in Ukraine since the end of 2013 has resulted in Russia being subject to severe economic and financial sanctions from the West. This forced it to accelerate the creation of an alternative to the American-centric economic system, although at the moment it is not yet capable of completely replacing it. In the spring of this year, the Russian government held a “de-dollarization meeting” under the leadership of First Deputy Prime Minister Igor Shuvalov. There, the Ministry of Finance announced plans to increase the share of ruble contracts and to phase out the use of the dollar. In May, at the Shanghai summit, the so-called "deal of the century" was signed, under which over the next 30 years, China will buy natural gas from Russia in the amount of about 400 billion dollars. At the end of June, Gazprom announced its readiness to use a ruble or yuan for this. The most significant progress in the sphere of de-dollarization is that from the end of August, Gazprom's subsidiary oil company will accept payments in rubles for the export of 80,000 tons of oil from the Arctic field to Europe, as well as an agreement on the use of the yuan in settlements for oil supplies through the Vostochnaya Siberia - Pacific Ocean ". In August, Vladimir Putin, during his visit to Crimea, said that "the petrodollar system should remain in the past," and also noted on this occasion that "at the moment we are discussing with several countries the possibility of using national currencies in mutual settlements." By several countries, this meant not only China - in August, Russia and Iran signed a historic deal to purchase oil for $ 20 billion for rubles, bypassing the Western embargo. During the meeting of the first vice-prime ministers of China and Russia, Igor Shuvalov and Zhang Gaoli announced that the governments of the two countries had agreed to increase the shares of the ruble and the yuan in trade. China, in addition to a bilateral energy agreement with Russia, attaches great importance to agreements on the use of local currencies in trade and finance. From 2008 to 2013, 2.6 trillion yuan ($ 424.6 billion) currency swap agreements were signed with 24 countries. Also, China and Russia last year reduced the share of US Treasury bonds in their gold and foreign exchange reserves, while Russia only in March sold almost a third of its US government securities. Eurozone also seeks de-dollarization In addition to the natural Sino-Russian alliance, an even more pronounced movement towards abandoning the dollar will gain strength within the European world. At the end of June last year, the US Department of Justice fined the French bank BNP Paribas $ 9 billion, which exceeds the bank's entire profit for 2013 by $ 900 million. The US leadership accused the bank of transactions with funds from Sudan, Iran, Cuba and other countries that were subject to economic sanctions. Even more humiliating for BNP Paribas, 13 of its senior employees will be forced to resign and will likely be banned from banking forever. In July, a meeting was held at the headquarters of the European Union at which the finance ministers of the participating countries launched the first de-dollarization initiative. While such a desire is quite natural for Russian energy companies, such an attitude on the part of the largest oil companies in Europe looks even more indicative. After the meeting, the head of the second largest oil producer, the French company Total, said after the meeting that if oil prices are denominated in dollars, this does not mean at all that payments for it should also be carried out in dollars. Due to the dollar's status as an international currency, much of its use outside America occurs in transactions that are not directly related to it, as a result of which the value of the US dollar is inflated in comparison with other currencies. For this reason, consumers within the United States receive imports at discounted prices. The strong demand for dollars in the world also allows the US government to refinance its debts at very low interest rates. Therefore, de-dollarization will undoubtedly be a direct challenge to the US economic hegemony and the overall high standard of living of its citizens, and America's political and business circles will oppose this process. At the same time, even taking into account the countries that have challenged the United States, de-dollarization will be an extremely long and fierce confrontation. Currencies of other countries can only partially replace the dollar for determining prices and settlements between trading partners. Moreover, such a replacement is possible only in bilateral relations between countries. In this sense, the renminbi is still not fully convertible and lacks wider international use as a reserve building tool. Thus, over time, de-dollarization will represent a multitude of national currencies that are increasingly used in the international financial system. At the same time, the main currencies will be highly dependent on swap agreements, similar to those that China is actively using now. Such a pricing and settlement model would be fraught with additional costs. The issue of distributing these costs between currencies and countries will make de-dollarization a long process and another serious political problem for the Chinese leadership. Bank of America: "currency wars" will lead to economic growth The most significant fluctuations in major currencies in 20 years occurred from mid-January to early February. This is stated in a study by BofA Merrill Lynch. The fall in rates is associated with "currency wars", said the author of the report, David Wu, BofA specialist in foreign exchange markets. Until now, he said, exchange rate volatility had only risen sharply during the 1997-1998 Asian financial crisis and at the height of the 2008 global crisis. By "currency wars" the expert means attempts by countries to reduce the rates of their national currencies in order to help the economy. The United States and China will primarily suffer from such a "war", Wu said. The danger for the US economy is the fact that 40% of the revenues of local companies are received abroad. In addition, cheapening foreign goods are becoming more attractive to buyers. The Chinese yuan also rose in price, however, according to the expert, Beijing is unlikely to start an artificial devaluation due to the threat of capital outflow and foreign currency loans from Chinese companies. The European Central Bank made its move in the "currency war" at the end of January, which announced its intention to "print" over € 1 trillion. After the information was made public, the euro fell against the dollar to its lowest level since 2003. The National Bank of Ukraine also refused to support the hryvnia, which renewed its historic low against the dollar. Earlier, the Swiss National Bank canceled the ceiling of the franc exchange rate. The unexpected actions of this country caused a storm in the foreign exchange market: many companies declared financial insolvency. Denmark may come to the same decision. "In a world where the sources for further growth are almost exhausted, and there are not enough political instruments," currency wars "will persist for a long time," the study notes.
According to Bank of America forecasts, "currency wars" should lead to economic growth.