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Seems reasonable to conclude that China is facing a liquidity and capital shortage. It is already gunning for $55bn from the IMF. Earlier in April it vocally reiterated its commitment to the international rule based order and to respecting others’ sovereignty. This seems like a prelude to a capital injection from America via the UAE swap corridor. UAE becomes the new center of intermediation for dollars to China (à la bessent comments), displacing London from that role. That’s very lucrative for UAE so it agrees to quit opec in exchange. With crude flows easing market prices and China gaining access to dollars, it can now afford to bailout the BRI. The pathway is the issuance of yuan denominated debt in uae which can bring price transparency to the yuan. And that debt can then be pledged by Chinese banks for dollar liquidity. This assures the yuan floats but doesn’t crash. It’s orderly liberalisation. But it does transfer power to the US.

The cryptic announcement that Iran will allow tankers to pass through the Strait of Hormuz if their cargo is paid in Yuan has many problems. Unless there are more details offered, view it as propaganda and not a workable idea. --- If you're interested in why, some thoughts... No operational mechanics were explained How exactly does Iran verify what currency a cargo was paid in before granting passage? Oil trades involve a chain of counterparties — producers, traders, refiners, end buyers — often with multiple legs of financing and settlement. There's no manifest line that says "paid in yuan." Is Iran proposing to inspect banking records at the Strait? Demand SWIFT confirmations from Chinese banks? This isn't a tariff booth, it's one of the world's most complex commodity markets. There is no operational framework described because there likely isn't one. The Saudis tried exactly this in 2022, and quietly killed it When Saudi Arabia floated yuan-denominated oil sales to China, it generated huge headlines in 2022. It went nowhere. Once you collect yuan, what do you do with it? China's bond market is partially closed to foreigners, capital controls limit repatriation, and yuan-denominated assets globally are a tiny fraction of what dollar assets offer. Oil exporters need somewhere safe, liquid, and deep to park revenues. That somewhere is US Treasuries, not Chinese Yuan-denominated bonds. Chinese capital markets are not deep enough The US Treasury market trades $800B+ daily. That depth is why the dollar is the oil settlement currency, not politics, not the petrodollar agreement, but pure market structure. If every barrel transiting Hormuz (roughly 15-20 million barrels/day pre-war) suddenly needed yuan to purchase, the demand shock on a managed, partially-closed currency would be enormous. China's capital markets cannot absorb that recycling flow. A surging yuan could actually hurt China Massive forced yuan buying would likely send the currency soaring, and that's the last thing Beijing wants. China is already battling deflation. Its export sector is under tariff pressure from the US. A sharply stronger yuan erodes export competitiveness. China has spent years carefully managing a gradual appreciation of the Yuan for strategic reasons. A shock appreciation forced by an Iranian is not in Beijing's interest. There's no indication Beijing has endorsed or agreed to this plan. Further, China has carefully avoided being drawn into the military conflict. Suddenly becoming the financial clearinghouse for the Hormuz passage, with all the secondary sanctions that come with it, is exactly what Chinese banks want to avoid. China buys Iranian oil through shadow-fleet intermediaries specifically to avoid formal yuan-settlement mechanisms that would expose Chinese banks to US sanctions. ---- This reads like a trial balloon from Tehran, not a workable financial architecture. It suffers from the same structural reasons that killed the Saudi yuan-oil experiment in 2022, with the added complications of US sanctions and the absence of Chinese buy-in. The dollar's dominance in oil markets is a function of capital market depth and convertibility, not something a Strait closure can unilaterally rewrite.

This is wild. China’s money supply just recorded its largest annual increase on record, excluding the post-COVID stimulus period. That amounts to roughly $4.5 trillion added in a single year — more than the Federal Reserve’s entire holdings of US Treasuries on its balance sheet. No wonder metals have been moving as much as they have recently.