On March 26th, 2018 China will release there first Yuan backed oil future on the Shanghai International Energy Exchange. This is one of their first initiatives to implement the grand One Belt One Road plan. China is in talks with Pakistan on a Yuan denominated currency-swap on crude oil. China’s president Xi Jinping’s plan to internationalize the Yuan will start with the oil market and accelerate into other commodities.
Professor Daly and myself will watch China’s oil future price closely in the next coming week, as it will set the tone of the Yuan’s presents in the international markets for the rest of the year. There is an increasing amount of coverage on China’s One Belt One Road initiative from United States banks who are looking at the plan as an illusive investment opportunity. The importance of the success of the oil future is imperative for China as it will finance economic investment in railroads and ports into Eurasian states.
Through the past month our research has led us to hypothesize the dethrone of the Dollar and the rise of the Yuan. 2018 will be a crucial year for the implementation of Yuan denominated commodity markets to finance any more Chinese infrastructural builds in surrounding countries. For the foreseeable future there will be decreased presents of the Dollar in international trades. The rise of the Yuan will solidify China as a economically stable powerhouse in the international community.