China’s semi-official Global Times posted an unsigned opinion column (i.e., written by its editors) on Sept. 14, headlined bluntly: “Non-dollar Settlement in Energy Trade Will Break US hegemony.” The article discusses the urgency of breaking U.S. dollar hegemony in energy trading, but the headline implies the broader strategic effect of such steps. Nor is it coincidental that such a call was posted on the eve of the Shanghai Cooperation Organization meeting, even though the article does not mention it.
The issue raised is “the increasing urgency for China, Russia and other economies to step up cooperation to break the US dollar’s dominance in the energy market,” in the face of the “havoc” and “shocks” to the global economy which are coming as the dollar appreciates and other currencies depreciate as the Federal Reserve continues raising interest rates. Global Times makes its case:
“…A strong dollar means energy products will become more expensive in terms of other currencies. When energy and raw material prices rise, the prices of other products will go up, leading to high inflation globally. The only exception will be the US where a strong dollar makes imported goods cheaper, thus helping keep its inflation in check.
“The reason why the US can, time and again, export its own inflation crisis caused by its previous monetary easing policy to the world is mainly because the dollar still holds the dominant position in the global foreign exchange market, reserve assets, trade settlement and other fields.
