China Economy: Impact of China-Saudi Trade on Yuan Internationalisation

Wednesday, 21 August 2024, 13:15

China's economy is witnessing a transformation as deepening ties with Saudi Arabia drive yuan internationalisation for oil transactions. The S&P Global report highlights enhanced economic and strategic alignments, forecasting increased yuan usage within the Gulf states. China’s push for the renminbi as an alternative to the petrodollar offers a new avenue for international trade.
South China Morning Post
China Economy: Impact of China-Saudi Trade on Yuan Internationalisation

China and Saudi Arabia: A New Economic Era

A deepening of economic relations between China and Saudi Arabia will advance the use of the yuan for oil purchases, according to S&P Global Ratings. This shift, catalyzed by President Xi Jinping's visit, indicates a profound change in China trade dynamics.

Boosting Yuan Usage Across Sectors

  • China's trade with the Middle East has tripled over two decades.
  • Yuan transactions may facilitate smoother economic interactions without the US dollar's constraints.
  • Saudi Vision 2030 aims to enhance economic ties, leading to increased yuan-based dealings.

Potential Risks with Yuan Adoption

  1. Yuan’s limited global use estranges currency exchange.
  2. Shifts to a yuan-based trade could incur substantial currency risks.
  3. Countries like Iraq are already experimenting with yuan settlements.

The journey toward yuan adoption necessitates substantial movement from China to alleviate risks associated with international currencies. The long-term implications may shape economic landscapes across the Gulf and beyond.


This article was prepared using information from open sources in accordance with the principles of Ethical Policy. The editorial team is not responsible for absolute accuracy, as it relies on data from the sources referenced.


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