If there was ever any doubt that
Beijing benefits from a strong currency
), it's over now. China is beginning to test the influence of its
money on the world economy, and it's doing so with Iranian oil.
[caption id="attachment_59423" align="alignright" width="300"
caption="Now paying for oil from Iran"]
According to a report in
The Financial Times
, Iran is now
accepting the reminbi
in exchange for its oil. That's important for both countries'
exports and imports.
points out, "Tehran is spending the currency, which is not freely
convertible, on goods and services imported from China."
attributes the Iranian deal to tensions with the United
States over Iran's nuclear ambitions. However, more countries are
likely to follow suit as they recognize China's global economic
If more nations take the Chinese coin, Beijing will have less
use for United States and European government debt. China will no
longer need US dollars or euros to pay for foreign goods and
services, and gold (
) will also get less attractive.
Expect more influence for China, and an easier transition from a
manufacturing-driven economy to a service-oriented economy. But
beware harder times for the United States and Europe as they lose
influence to the dragon.