From petro-dollar to tech-yuan

00:00:00: Geopolitical tensions are reshaping the global economy, if you haven't noticed.

00:00:05: The US central position is changing Trust in the U S is eroding and that's re shaping the power play among big economies.

00:00:14: In this context China Is no longer happy to participate And be crushed.

00:00:19: No one is but China has willpower on the means To stand up today.

00:00:25: so emerges the concept of petrol But it's quite difficult to trade Petro-UN, so in this episode I will dive into how to build exposure the idea of a more powerful and impactful China.

00:00:39: Before i do please keep that opinion on my own.

00:00:43: And this is not financial advice.

00:00:53: So with Donald Trump second term in The White House Or at least it feels like.

00:01:01: The blind trust in the US is weakening, the

00:01:04: U.S.'s

00:01:04: debt is worrying...the geopolitical tensions and wars around world are changing way.

00:01:09: parts of the world are complying with the US-centric economic, geopolitic & financial systems.

00:01:16: And for China this is concretely happening through replacement of the US Treasury reserves by gold but also improved business and trade relations to Western economies, especially across Asia and Africa.

00:01:33: And while China named it years ago the Belt & Road Initiative remember that?

00:01:38: The idea was to build infrastructure and trade corridors beyond Chinese borders the modern silk road, if you will.

00:01:46: And US hectic policy today is grandly helping China in becoming that superpower they have been dreaming of.

00:01:53: and indeed over past few months we've seen a clear shift.

00:01:57: More trade from oil to raw materials has increasingly being settled Not in US dollars, but in Chinese UNs.

00:02:05: And naturally a label has emerged.

00:02:07: People now talk about the Petro-UN A direct reference to the petrodollar system and idea that it might finally be challenged.

00:02:15: It is big, it is disruptive and its something you want to trade.

00:02:19: so bear with me.

00:02:20: I will start with the petrodollars and end in a very different place.

00:02:24: but first let's directly look into the petro dollars and the possibility of his straightforward petrol uan trade.

00:02:31: for that case.

00:02:32: The global system was built on a simple loop Oil is sold in US dollars, those US dollars are recycled into U.S assets and the system reinforces itself.

00:02:41: This foundation of the petrodollar was also supported by major oil producers and institutions like OPEC And with no doubt it's made America great Real Great Big Fat & Powerful.

00:02:54: But today, China is gradually rewriting part of that playbook.

00:02:58: It's no longer just accepting the US way of doing as not accepting the U.S.

00:03:03: Way Of Doing Today Is No Longer Seen As A Bad Thing To Do From A Diplomatic Perspective.

00:03:08: So it's buying sanctioned oil for example from Russia and in Iran And In Chinese Wends And then also expanding bilateral agreements Bilateral Trade Agreements With Exporters While Encouraging Settlement Outside The US Dollar System And while the geopolitics are very complex and they can come back to US dollars, well this isn't just about oil.

00:03:30: We're actually seeing more trade across commodities and goods that all being settled directly in terms of Chinese yuan.

00:03:38: So yes, the petrol yuan is a rising story but China's emergence is real thing.

00:03:43: I wouldn't even call China an emerging market anymore!

00:03:46: I would call it an emerging superpower instead But trading that is not straightforward through FX, at least because the Chinese yuan isn't sexy.

00:03:54: There are two Chinese

00:03:55: U.S.,

00:03:56: the CNY and H. The first is the own Shor Yuan.

00:04:00: It's traded inside Mainland China with a daily trading ban set by People's Bank of China.

00:04:06: They're strong capital controls heavily managed exchange rates, so you can't really trade it.

00:04:13: Then we have the offshore version of The Chinese Yuan, the CNH.

00:04:17: This one is traded outside China Main in Hong Kong London and Singapore And You Can Trade It On A Trading Platform!

00:04:23: It Is More Flexible.

00:04:25: It Is Driven By Supply Demand And Used For International Trade Settlements.

00:04:29: It Does React To Global Sentiment to Some Extend... ...It Can Move Faster Than The CNY The Onshore Version But Doesn'T Drift Freely.

00:04:38: Either it doesn't really behave like a typical macro trade.

00:04:41: Moves are gradual, volatility is limited and policy dominates price action.

00:04:47: so even if the Petro Yuan story's accelerating The FX market doesn't necessarily give you a clean way to express it.

00:04:54: So if he can trade the Chinese Yuan directly, where do look gold?

00:04:58: Well You'll get gold.

00:04:59: today countries are reducing their reliance on the US dollar and us treasuries But they don't simply switch into another currency.

00:05:07: that your has emerged as potential alternative.

00:05:10: but here I have got its challenges And we talked about in a previous video.

00:05:14: If you haven't seen just yet Please go and watch at first.

00:05:18: What what i'm trying is Another currency in the actual geopolitical context is not an option, and even less to Chinese yuan because geopolitical risks here are very high as well.

00:05:28: So what countries do today?

00:05:30: Is they increase their gold holdings As Gold is a subpronational asset?

00:05:34: you've seen it clearly through central banks ramping up goal purchases And China somehow surfing on that vibe by encouraging straight partners To convert their trade surplus in UN revenues into gold.

00:05:49: This is critical because it solves one of the biggest issues with Chinese yuan.

00:05:53: What do you do when China pays you with Yuan?

00:05:57: A gold provides dance work!

00:05:59: So instead buying Chinese yuan, you can position for de-dollarization via gold.

00:06:05: You replace US dollar by gold But Gold's only part of this story.

00:06:09: Because not all Chinese yuan gets converted a growing share actually gets spent.

00:06:14: And maybe this is the piece that many are missing today, countries sell oil or goods to China.

00:06:20: they receive Chinese yuan in exchange and they buy Chinese goods with Chinese Uens and they invest in Chinese markets.

00:06:27: This creates powerful feedback loop.

00:06:29: UN flows out and then it comes back in a little bit like petrol dollars on.

00:06:33: that has major global and economic implications.

00:06:36: if more trade is settled in new an more liquidity stays within China's ecosystem And ultimately that should support domestic demand, financial market development and capital market debt as well.

00:06:47: So instead of asking how do I trade the Petro-UN a better question is where does that UN end up?

00:06:54: Increasingly The answer Is the Chinese markets.

00:06:58: Let's be clear China is no longer just selling cheap goods to the world.

00:07:02: It is increasingly selling technology.

00:07:04: We are talking about chips, electronics smart phones robots.

00:07:08: But more importantly we're talking about EVs batteries solar panels and they are exporting cheaper computing power as well.

00:07:17: if you missed that story.

00:07:18: yes Chinese.

00:07:19: or exporting computing power because They have cheaper land for building data centers And they had cheaper energy through clean sources Mounds of solar panels an wind turbines our producing cheaper and cleaner energy.

00:07:32: that powered data center is there.

00:07:34: And when they will start mass exporting AI powered robots, that would also become a growing revenue.

00:07:40: so China isn't just exporting its products it's exporting technology and energy transition.

00:07:46: It has maybe on his way to crush the petrodollars by reducing the need for petroleum products in first place.

00:07:52: So I believe we can simply drop the word petrol yuan replace it with tech yuan.

00:07:57: And it's needless to insist that their clean technology exports have gained momentum since the Iran war started.

00:08:04: So investing in Chinese technologies is interesting, but investing an individual name requires caution.

00:08:10: For example for Chinese EV makers The price competition so intense That the margin pressure can only lead to consolidation.

00:08:18: We also have trade barriers To prevent these cars from inundating European markets and US markets.

00:08:27: players in China like NIO and BYD under pressure.

00:08:31: Elsewhere the Chinese big technology companies are truly amazing.

00:08:35: Alibaba, Baidu, Tencent.

00:08:37: they're all surfing on AI vibe.

00:08:39: for those who look for alternatives to a highly priced US Big Technology.

00:08:43: They do change global payment systems The idea we perceive commerce by their e-commerce platforms.

00:08:50: but government crackdown here has taken toll since late.

00:08:54: two thousand twenty one investors still very much concerned that kind of crackdown could happen again.

00:09:00: Then the country continues to grapple with demographic and property crisis.

00:09:05: so what I'm trying to say is not everything as simple, and NOT EVERYTHING IS ROSY!

00:09:10: And this is exactly why you see The Hansang Index today.

00:09:13: that reflects the Chinese technology world and companies recovering only slowly from.

00:09:23: But the encouraging thing here is that these Chinese technology companies remain cheap, but they do have a lot of potential.

00:09:30: That has not been fully explored in my opinion.

00:09:33: zooming out if we summarize what we're witnessing today Is not the weakening off the US dollar only?

00:09:41: more multi-polar system where gold acts as a neutral anchor.

00:09:45: China is building a closed loop economic model based on Gold and UN, And power forces are changing.

00:09:52: So yes the picture of UN rising but The real story isn't what China's buying with their U.Ns But What they're selling?

00:09:59: Increasingly China is selling technology.

00:10:02: It Is Selling energy transition that we all need.

00:10:05: and many people still think that Chinese are just selling cheap replicas of Western goods.

00:10:10: And that gap, I think is where the real opportunity lies.

00:10:14: So this is all for this special episode on China!

00:10:17: i'm Ipeco Skardishkoja.

00:10:18: Thank you for staying with me this far.

00:10:21: I hope This episode has been helpful and it has been insightful to You so please do not hesitate to leave your comments Your reactions and your questions below.

00:10:31: as usual Follow us on Instagram, on X on LinkedIn but also on WhatsApp, Thwaz, Telegram and Blue Sky for regular market updates.

00:10:41: Subscribe to our YouTube channel for daily market commands!

00:10:45: And please don't forget to hit the like button on these videos so let's know that you enjoy them.

00:10:52: So I will meet again very soon.

00:10:54: Until then Goodbye.

00:10:59: CFDs and digital assets are volatile, not suitable for everyone.

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00:11:10: permitted.".