Bill Poulos - China as the 21st Century Global Economic Leader: The Chinese Petro-Yuan and The New Silk Road (PART 1)
Bill Poulos is a retired GM executive and co-founder of Profits Run, Inc. He holds an MBA with a major in finance. He also holds a degree in engineering. Bill Poulos has authored multiple financial training books as wells as written multiple investment programs and courses. Bill is a philanthropist, husband, father, and grandfather. He lives with his wife, Karen, in Michigan. Here he offers insight into China becoming the economic leader of the 21st century.
China is going to become the number one economic power in the world within a matter of a few years.
This will happen by virtue of China’s size but also by virtue of the fact that the Chinese leaders have opened up their economy to a capitalistic economy.
Yes, China’s economy is controlled by the government but otherwise China’s leaders allow their people to participate in markets freely and own property.
Just because of China’s demographics alone, they’re going to become the number one economy in the world — knowing that China has put forth a number of initiatives to solidify their geopolitical position in the world through their economic clout.
One of those initiatives is the new Silk Road.
The new Silk Road is a land bridge to facilitate trade all across Eurasia, Europe and Asia. It involves all new highways, trains, and bridges. China is collaborating with all involved countries to put this in place.
China is also taking steps to move away from the petrodollar to a yuan-based petro currency to further solidify their economic clout.
Of course, China also has their military to expand their geopolitical reach.
There’s nothing the United States can do stop that economic growth, but there’s a lot the United States can do to participate and benefit from it on a fair and equitable basis.
To start with, China is growing very rapidly. Their economy is growing very rapidly.
China’s economy will overtake the US economy as the number one economy in the world within just a couple years.
Within 10 or 20 years, it will absolutely leave the US economy in the dust.
China is the economic leader of the 21st century.
Britain was the economic leader of the 19th century, US was the leader in the 20th century, and now China will be the economic leader in the 21st century.
China is the big dog.
China, knowing that they’re in this position, realizing the strength they have from being the up and coming new economic leader, and also being a net importer of oil themselves — they’re not too happy that the arrangement (that’s been in place since the Nixon gold window) was closed.
The Nixon arrangement concluded that all oil transactions, from that day forward, were to be done in US dollars.
That meant any country, including China, that wanted to buy oil from the Middle East had to have dollars to buy it, hence the name petrodollar.
Why was Nixon able to do that? Because the United States dollar was the reserve currency through the world, and it still is.
China’s not too happy about any of that these days. They don’t want to be in that position, so they are taking steps to move towards a yuan-based petro currency.
The yuan-based petro currency would dictate that the sellers of oil will accept yuan versus dollars.
Part of the strategy to do that, which is no easy task by the way, is to open a futures exchange in China. I believe it’s Shanghai.
The futures exchange will trade oil contracts in yuan so that if someone wanted to sell their oil to China, they could do so by selling it on that exchange. People would receive yuan in exchange for oil — as opposed to dollars.
That’s a big step. If China can make this futures exchange work and get its liquidity up, that will help them move in the direction of being less dollar-dependent to make oil purchases.
The other reason they want to do that is the United States has enormous influence around the world, certainly militarily by virtue of our Navy (we have the biggest Navy in the whole world) but also of the petrodollar.
China is looking to be the number one geopolitical force in the world.
They really can’t do that as long as the petrodollar is here.
China is interested in incurring favors all around the world with countries that they can help economically.
As a quid pro quo, accepting the yuan as the currency used in trade as opposed to the dollar.
You see, it goes beyond just oil. China wants the world to use the yuan in trade, too.
China is moving like a steam roller, slow, but they’re moving.
Stay tuned for Part Two of Bill Poulos: China as the 21st Century Global Economic Leader: The Chinese Petro-Yuan and The New Silk Road. Here he will discuss the New Silk Road and what that means for the United States.