Following news that Brazil and China agreed to trade in their local currencies, it emerged that a French company charged the export of liquefied gas (LNG) to China National Offshore Oil Corporation in the Chinese yuan. This is another sign that the inexorable process of de-dollarization has gained momentum and even spread to the European Union.
This should not be surprising given the difficult economic situation across the EU, meaning that companies will look after their own interests above all. None-the-less, the media has already characterised the transaction between the Chinese company and Total Energy in yuan as historic.
Although this change in currency transaction may resonate with the situation in which the world is currently in, the de-dollarization process started long before the Ukrainian and pandemic crises. It is recalled that German companies were buying Russian gas from the Moscow and St. Petersburg exchanges with rubles.
Meanwhile, the dollar, which once accounted for 70% of foreign exchange reserves, has now fallen to 59%. The process is ongoing, and will take a long time, but it cannot be halted. One of the initial goals of the BRICS association was de-dollarization. Every annual conference since the founding of BRICS has stressed these processes. Although trading in foreign currencies expectedly developed between BRICS members and aspiring members, such as Egypt, it was not expected that countries like France would join the fray so quickly.
The case of Total Energy is significant because it indicates that the de-dollarization has started even in Europe. Although state leaders and governments might have certain policies, companies must adapt to the requirements of the manufacturer and major customer, which in France’s case is China.
The Chinese insist on payments in the yuan so that it becomes a reserve with the same respect as the dollar, Swiss franc, euro, and yen. The yuan is an international means of payment that fully meets standard norms because currency parity can be established with it.
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