AMY GOODMAN: So, Professor McCoy, one of the key reasons binding Russia to China, in addition to what you’ve been talking about, is that Russia is a major energy exporter. China is one of the world’s leading energy importers. Put that together with, The Wall Street Journal reporting last week, Saudi Arabia is in active talks with Beijing to price some of its oil sales to China in yuan, a move that would dent the U.S. dollar’s dominance of the global petroleum market. China buys more than a quarter of the oil that Saudi Arabia exports. If priced in yuan, those sales would boost the standing of China’s currency. Can you talk about the significance of both the currency and energy politics?
ALFRED McCOY: Sure. One of the foundations of U.S. global powers, right since the end of World War II, has been that the dollar has been the functional global reserve currency. That was set at the Bretton Woods Conference in 1944. And in 1971, when President Nixon ended the automatic convertibility of dollars to gold, Saudi Arabia announced that they would keep conducting their petroleum transactions in dollars. And since oil is the most negotiated of all international commodities, if the world is doing its oil business in dollars, that means the dollar has that continuing support as global reserve currency.
Since 2015, the Chinese currency has become a part of the international basket of currencies recognized by the International Monetary Fund. And as China’s dominance over the global economy grows and it becomes the world’s largest economy, the Chinese currency’s role in that international economy is going to increase. And once the dollar declines — that is the most negotiable, the most visible part of U.S. global dominance — that global dominance will follow the decline of the dollar downward.
AMY GOODMAN: How do you see all of this playing out, Professor McCoy?
ALFRED McCOY: Short term, I think that what we’re looking at is a kind of a parallel of what happened with the last time China and Russia were aligned. In the early 1950s, Mao Zedong went to Moscow. He was a supplicant. He formed an alliance with Joseph Stalin. And Joseph Stalin cashed in that alliance very quickly by using China to enter the Korean War. China fought in Korea for three years. It cost them about 40% of China’s budget, 200,000 dead Chinese soldiers. What we’re looking at is kind of a reprise of that. You know, Putin comes to Beijing in February in the Winter Olympics. He’s now the supplicant. He needs China’s diplomatic and economic support for his Ukraine invasion. And so, at the moment of this very strong alliance again, this time Putin attacks. He’s sacrificing his budget, his soldiers, in this strategy of pushing and pushing and breaking the U.S. dominance over Eurasia.
I see, long term, the growing power of China over the Eurasian continent. Their Belt and Road Initiative, this trillion-dollar development program that now incorporates around 70 nations in Eurasia and Africa, laying down infrastructure — pipelines, railroads and roads — across the whole Eurasian landmass, if this development project succeeds — and it’s 10 times the size of the Marshall Plan that the United States used to rebuild Europe after World War II; it’s the biggest development scheme in human history — if this scheme works in laying down infrastructure of rails, pipelines and roads across the Eurasian landmass, and that draws the commerce of Eurasia, home to 70% of the world’s population, towards Beijing, then, almost as if by natural law, power and prestige and global leadership will flow towards Beijing.
And so, what we’re witnessing is the violent eruptions of a great tectonic shift in global power. As U.S. global power declines, China ascends. Power shifts from the West — Europe and the United States — towards Asia. And what we’re witnessing then, an historic change that is for the — I’d say, by 2030, by the end of this decade, it will become clear that U.S. global power has eclipsed, that power has shifted to Beijing on the Eurasian landmass, and they are the new global hegemon, constructing a new kind of world order, far less concerned with human rights, far less concerned with law, a kind of transactional world order of mutual convenience.
www.wsj.com
ALFRED McCOY: Sure. One of the foundations of U.S. global powers, right since the end of World War II, has been that the dollar has been the functional global reserve currency. That was set at the Bretton Woods Conference in 1944. And in 1971, when President Nixon ended the automatic convertibility of dollars to gold, Saudi Arabia announced that they would keep conducting their petroleum transactions in dollars. And since oil is the most negotiated of all international commodities, if the world is doing its oil business in dollars, that means the dollar has that continuing support as global reserve currency.
Since 2015, the Chinese currency has become a part of the international basket of currencies recognized by the International Monetary Fund. And as China’s dominance over the global economy grows and it becomes the world’s largest economy, the Chinese currency’s role in that international economy is going to increase. And once the dollar declines — that is the most negotiable, the most visible part of U.S. global dominance — that global dominance will follow the decline of the dollar downward.
AMY GOODMAN: How do you see all of this playing out, Professor McCoy?
ALFRED McCOY: Short term, I think that what we’re looking at is a kind of a parallel of what happened with the last time China and Russia were aligned. In the early 1950s, Mao Zedong went to Moscow. He was a supplicant. He formed an alliance with Joseph Stalin. And Joseph Stalin cashed in that alliance very quickly by using China to enter the Korean War. China fought in Korea for three years. It cost them about 40% of China’s budget, 200,000 dead Chinese soldiers. What we’re looking at is kind of a reprise of that. You know, Putin comes to Beijing in February in the Winter Olympics. He’s now the supplicant. He needs China’s diplomatic and economic support for his Ukraine invasion. And so, at the moment of this very strong alliance again, this time Putin attacks. He’s sacrificing his budget, his soldiers, in this strategy of pushing and pushing and breaking the U.S. dominance over Eurasia.
I see, long term, the growing power of China over the Eurasian continent. Their Belt and Road Initiative, this trillion-dollar development program that now incorporates around 70 nations in Eurasia and Africa, laying down infrastructure — pipelines, railroads and roads — across the whole Eurasian landmass, if this development project succeeds — and it’s 10 times the size of the Marshall Plan that the United States used to rebuild Europe after World War II; it’s the biggest development scheme in human history — if this scheme works in laying down infrastructure of rails, pipelines and roads across the Eurasian landmass, and that draws the commerce of Eurasia, home to 70% of the world’s population, towards Beijing, then, almost as if by natural law, power and prestige and global leadership will flow towards Beijing.
And so, what we’re witnessing is the violent eruptions of a great tectonic shift in global power. As U.S. global power declines, China ascends. Power shifts from the West — Europe and the United States — towards Asia. And what we’re witnessing then, an historic change that is for the — I’d say, by 2030, by the end of this decade, it will become clear that U.S. global power has eclipsed, that power has shifted to Beijing on the Eurasian landmass, and they are the new global hegemon, constructing a new kind of world order, far less concerned with human rights, far less concerned with law, a kind of transactional world order of mutual convenience.
WSJ News Exclusive | Saudi Arabia Considers Accepting Yuan Instead of Dollars for Chinese Oil Sales
Saudi Arabia is in active talks with Beijing to price its oil sales to China in yuan, people familiar with the matter said, a move that would dent the U.S. dollar’s dominance of the global petroleum market and mark another shift by the world’s top crude exporter toward Asia.
www.wsj.com
