🇨🇳 China's 'petro-yuan': The end of the dollar hegemony? | Counting the Cost

[Music] hello I'm handsome seeker this is counting the cost on al-jazeera your weekly look at the world of business and economics this week there's a new way to trade oil a crude futures contract was launched in China find out what it all means for the dollar and oil exporting countries the Africa CEO forum 2018 way into Africa trade was a hot topic of the world's largest gathering of the continents private sector plus a push for better regulation of the digital economy has led to a rocky end of quarter for big tech this week history was made when the Shanghai International energy exchange launched the first crude futures contracts priced in Chinese renminbi or yuan it is an attempt to turn the global oil market on its head a China the world's biggest oil importer buys around 9 million barrels of oil every day and it wants to use its own currency to price the world's most traded commodity you've heard of petrol dollars but what about petrol yuan the US dollar has been the main currency for oil futures contracts are launching a contract in its domestic currency is a sign that China wants to you want to play a bigger role in global oil trading China is also taking on the world's most used oil benchmarks Brent and WTI crude which are both priced in dollars but Shanghai traded oil is still far away from earning benchmark status and taking on the petro dollar won't be easy well joining us now from London is Mikael made an Asia analyst and vice president of research at energy aspects thanks very much for being with us so first off what does this mean then for the major oil producers particularly here in in the Gulf region who have always traded on the US dollar for now it doesn't mean many changes oil is still going to trade in the US dollar but increasingly over time there will be more transactions Mb this is not a game-changer yet this is not at all the RMV the Chinese currency UPS eating the US dollar but it does mean that increasingly some of the flows will go in RMB this gives Chinese refiners and domestic traders the ability to buy crude using their own currency but again the transition to the dollar will still have to happen so just picking up on that then what what does this name mean for for the oil consumers like China that they are going to be trading on on their own currency what is that what implications does that have going forward I mean the goal is for China to establish an Asian benchmark that will reflect Chinese consumption and sort of Chinese and more broadly Asian demand patterns but in the near term we have to bear in mind that roughly seventy or even more than that of the people registered on the I in year retail investors so there is a huge risk of speculation being pretty rampant on on the ine and to begin with we are seeing quite a lot of movement that is fueled just by the need of Chinese mom-and-pop investors to find a place to put their money so we shouldn't place too much emphasis for now on this as a reflection of Chinese consumption needs but again as the iron evolves and as the contract specifics are ironed out it will become a better reflection of how China is consuming oil and how much it needs on a forward basis does this have the potential though in the future to to challenge the US dollar dominance in oil trading I mean I think that's still highly unlikely I mean if we're looking at a 10 15 outlook perhaps but for that to happen we would need the Chinese currency to become freely convertible we would need other countries to open up to settlement in the RMB but again the first and the primary issue will be currency convertibility and for now the Chinese government is very reluctant to loosen currency controls and to give it up to free trade and how much of a challenge is that gonna be then for foreign investors because the goal here is is as well is to get more foreign investors to buy into Chinese oil futures in foreign investors are very cautiously starting to trade on the ine they can hedge their RMP exposure but again it will be more of limited transactions on the ironi to try and get a sense of how these are happening what the I&E could become is a storage play in Asia so because there are storage tanks associated with the ine it could be a venue for foreign traders or foreign investors will be mostly traders and people with the physical exposure to bring crude to China store it offshore and then deliver it elsewhere into Asia so there is the element of hedging a currency risk which I think a lot of foreign investors are used to but before this becomes a more widely used tool again we would need the Chinese oil market to open up much further and the Chinese currency to liberalize in much deeper way than it is currently and we've heard a lot of talk over the last year about the Chinese President Xi Jinping's one belt one road initiative this this initiative to develop ties across Europe the Middle East and Asia could paying in paying for the one paying one for oil how is that tied in to that I mean it's all part of again China's you could call it empire building it's laying the infrastructure and then laying the physical infrastructure and then the financial technical foundations for China to become the hub or the center of a broader trading universe if you will that it revolves around the Silk Road there are actors that do pay in our and being that are willing to accept those trade offs more often than not the producers that are willing to buy an R and B are the ones that are under sanctions or that have limited access to global financial markets and therefore it is a double-edged sword for them right now so again the currency the RMB will increase in a world you're seeing an increase in global transactions that is part of the belton road but for China to become a truly global player it will also have to relinquish some of the controls that it likes to hold on in the foreign in the domestic market and again that will take time what's the likelihood of that of that happening of China's government loosing loosening the reins so to speak it's very hard to see that happen in the coming five years they still have a lot of domestic challenges that they need to meet and those and I think the government sent increasingly under siege in paying is that the state and the party needs a very firm control over that if liberalisation was the trend in the 90s I think we're very much seeing a reversal of that so China is very much willing to become a global player but under its own terms and whether the global market in global investors are happy to take that on I think we're not seeing a huge amount of appetite for that yet we calm a done thanks for being with us thank you now technology stocks have had a dramatic week at one point the so-called Fang stocks of Facebook Amazon Netflix and Google saw their worst one-day loss as a group but by Thursday they managed to end the quarter higher and it's all because the business models of tech Titans like Facebook have been getting more attention from regulators and stock market valuations may have to be adjusted if the current business models are forced to change and the way our data is used is something Jonah hall explores now gluten field every single time the man who murdered Joshua is an illegal alien I want us to pave the road from Ankara to Brussels political attack ads are nothing new nor is aiming there but a carefully selected audience so-called micro targeting what is relatively new is the use of personalized data by political campaigns to find out almost as much about you as you know about yourself in terms of the whole ethos of influence and persuasion you know every every post everything that you like these are all bits of data that go in towards building a profile against against people they're not the same knowledge is power so it's really surgically being able to predict and influence people's behavior at the heart of the scandal involving the political consultancy Cambridge analytic and it's alleged use of data from 50 million Facebook profiles is the charge that personal data has been used to distort and undermine the democratic process but the easiest way that you can influence someone's behavior is by kinked continually showing them something time and time again then they've throught become unconsciously influenced and therefore take on potentially a new new belief system the point of most political campaigns is to change beliefs and attitudes so is there anything wrong with targeting voters in this way Cambridge analytical has boasted that it's cutting edge micro targeting campaign won the US election for Donald Trump that sparked outrage and indignation of course especially among trumps political opponents but it's worth remembering that a previous president is also believed to have won the White House thanks to online micro targeting none other than Barack Obama and with considerably less outrage and indignation as a result well I think the segmentation that they are doing now which Cambridge analytical doing now is very much the same thing that Barack Obama did in 2012 is trying to make the advertisements as relevant and personal to people and voters as as possible Benedict Pringle is an ad executive who also runs a blog on the sometimes dirty business of political advertising his day job and his sideline have much in common while campaign techniques become ever more precise winning elections is after all a sales job I think that the margins in the Trump election and in the brexit referendum were so small and the number of people that were in play the persuadable voters were so few that the number of ads that will run the amount of money that was spent in targeting them would have undoubtedly had an impact on the result would it change the result impossible to say will it have impacted at least you know a decent chunk of the persuadable voters absolutely so micro targeting is a winning strategy that's here to stay and the more data we put into the system about ourselves the more data is available to influence to persuade and to change the way we think now reports that US President Donald Trump is looking to change the way online retailer Amazon is regulated since its share price plummets earlier this week Katya Lopez ha Joanne reports at closing bell the price of Amazon shares had dropped by some five percent in the course of the day that's a loss of close to fifty billion dollars to shareholders this is a consequence of a report that President Trump is and I quote obsessed with Amazon I applaud the formation of the innovation Council and angry at its owner Jeff Bezos here in a conversation with President Trump during a roundtable at the White House the last time Amazon suffered this scale of loss followed this tweet in August of last year Amazon is doing great damage to taxpaying retailers declared president Trump towns cities and states throughout the US are being hurt many jobs being lost perhaps not coincidentally be Tso's is also the owner of The Washington Post that has been twinned with Amazon in disparaging presidential tweets the report quotes an unnamed source as saying Trump has wandered aloud if there may be any way to go after Amazon with antitrust or competition law despite this being the domain of the Federal Trade Commission and the Justice Department the White House denies there is any specific policy being considered against any specific organization we have no announcements and no specific policies or actions that were currently pushing forward or considering taking the president has said many times before he's always looking to create a level playing field for all businesses and this is no different and he's gonna always can look at different ways but there aren't any specific policies on the table at this time an assurance that may ring hollow to shareholders who have lost billions that's the possible consequence of a president once again publicly thinking aloud all right still to come on counting the cost a rebranding of tourist towns in the mountains of Cyprus but first when stocks are included in a big international index it means millions of dollars of foreign investment will flow in that's because index tracker funds by law have to buy stocks that make up these indexes so let's look at this week's decision to include Saudi Arabia's stock market in a key emerging market index run by footsie Russell from March 2019 that could prompt inflows of about five billion dollars from funds tracking the index rival global index MSC I will make a decision in June on whether to include Saudi stocks that could mean a further 10 billion dollars would pour in boosting foreign ownership of Saudi stocks and foreign buyer interest is something the Saudis will be chasing if a plan to list part of the world's biggest oil company Saudi Aramco goes ahead and you may have seen some headlines this week about the world's biggest ever solar project Saudi Arabia and Japan Softbank signed up to a two hundred billion dollar solar mega plan it will feature the biggest battery ever made and networks of solar panels across the saudi arabian desert several analysts a caution the current agreement is not binding and could be revised now anger is growing from some consumers in Somalia over the rising cost of shopping and eating out it's because of the first five percent sales tax in nearly 30 years the government says the levy is crucial for Somalia's economic recovery Mohamed ro reports from Mogadishu Mogadishu sliggoo is a sign of Somalia's growing sense of optimism at its coffers with shaded tables set clients mainly made of militias welfare elite sipping expensive coffee but these days they are having to pay more for their food and drinks the government has just introduced a five percent sales tax for the first time in almost 30 years many unhappy I just paid three dollars of tax yet I don't trust this government they have mismanaged revenue from other sources including donor funds these tax will not be different the reaction of Somali traders to the tax has been more dramatic shops and stores in Mogadishu spalling baccarat market which is a lifeline for the City and surrounding areas remain closed for days the traders were particularly and get by the government's insistence that they pay the value-added tax up front we had meetings with the prime minister in his finance minister to voice our complaints the meetings was inconclusive we then decided to shut our businesses in protests businesses have since reopened signalling a first round of victory for the government of God we explained that there was no going back on this tax and that it must be paid for the sake of the nation of Somalia people relented and now more and more people are stepping forward to register for taxation government officials say revenue from taxes will be distributed across the regions of the country to fund healthcare education infrastructure and security tax collection is also a key condition for debt relief for Somalia from the International Monetary Fund and the World Bank Somalia all around four billion dollars most of it interest and penalties on nearly three decade old loans made to the former military government whose overthrow in 1991 plunged the country into years of lawlessness that that makes it almost impossible for Mogadishu to access money from international organizations like the IMF forcing it to rely almost entirely on aid for its budget with some semblance of taxation now in place days optimism that Somalia might have embarked on the road to self-reliance but in taxing a nation that has seen little official levies in almost three decades officials admit they are facing a daunting task well this week Africa's biggest companies have been meeting heads of state and investors at the annual Africa CEO forum this year's two-day event held in Ivory Coast featured discussion and debate around the economic and industrial challenges facing the African continent becomes just one week after the leaders of 44 African countries signed a framework deal to create one of the world's largest free trade bloc's but Nigeria and South Africa two of the continents biggest economies have yet to sign up so into Africa trade and getting rid of barriers was a hot topic at this year's CEO forum well joining us now from London is Reza Khan chief economist for Africa and Middle East research at Standard Chartered Bank thanks very much for being with us so what do you what do you take us as the main theme from this year's Africa CEO forum well there's certainly a lot of growth optimism at the moment and this stems from what we've seen on a global level we started 2018 with expectations of growth in almost every major economy and understandably this is feeding into commodity prices it's feeding into individual African economies however a more consistent theme has been this greater realization in the recent past that global growth alone is not going to do it for Africa there are still very big economies Nigeria for example something of a fragile recovery having come out of some very difficult months now performing positively in terms of having emerged from the recession but a great deal more focus that's needed on domestic reform and I think that sense of reality is something that is shared by many different African economies the worst might be over in terms of that three-year adjustment to weaker commodity prices but there are still considerable challenges ahead one of the things that was talked about at this forum is this whole idea of moving away from outside investment and getting Africans themselves to be bigger players in their own economies how important is is that you and is that something that is registering with with many of these countries and their governments this has been a growing theme and certainly even through those recent years of slower growth in Africa generally we have seen greater interest from African companies African multinationals investing in other countries we think that this is likely to be built on over the coming years it is after all African CEOs who are most closely in touch with the opportunities in neighboring countries so we do expect to see as a theme that much more cross-border investment however it's also necessary to take a broader macroeconomic look at this for most countries in Africa there is still a need to dramatically scale up the investment that we're likely to see either on the public side or the private side the fact that we're seeing other African businesses more interested in investing in their neighboring countries is a good thing but it can never be the complete response to the challenge that exists and that is but most sub-saharan African countries are still in need of a great deal more investment than they are currently seeing where are the surpluses going to be generated they're certainly going to be a case for investment from the rest of Africa as well as the rest of the world and what about the African companies themselves there is an expectation broadly that some of those very difficult financial conditions are giving way to perhaps what might be the expectation of Greater growth greater volumes growth in the years ahead we shouldn't forget the context of this if we look back on recent experience it has been a challenging time in many economies there were issues to do with shortages of foreign exchange which key commodity producers are only just recently starting to work out of the operating environment in Africa has been more difficult as we saw government's struggling in some instances to keep up with payments banking systems were impacted lone growth has been weak in many different countries and it's really only in t18 where we expect to see something of a more robust economic recovery taking hold which will relieve some of those pressures to do with that difficult operating environment and there is also this drive across the continent to to bring down the trade barriers between individual countries there are efforts as well for towards open skies to make travel across the continent more efficient how does that factor into all of this and improving all all of these economies there are needless barriers that make it difficult for one African corporates to be investing in another so the fact that fora such as the recent CEOs forum means that people are starting to talk about these issues and the expectation is that there is going to be something in the way of delivery to address these unnecessary barriers that is only something that can enhance the business environment that can lead to more positive outcomes in the future all right good to speak with you Reggie Ron joining us there from London thank you and finally tourism is booming in Cyprus as the island works to recover from a damaging financial crisis five years ago not all areas though are reaping the rewards Sami Zidane explains how the government is trying to change that it's hard to fit into a postcard just how nice it is to be away from the sub-zero temperatures back home we come to Cyprus because now in Ukraine is snow and cold and we wanted to go to spring to see flowers and it may be to swim in sea it's a familiar story the abundance of beaches and sunshine has attracted steadily increasing numbers of tourists to Cyprus that has seen the economies of coastal towns boosted as the number of visitors reached 3.6 million last year officials expect the number of tourists to reach a record level in 2018 many head for seaside towns of course leaving places in the mountains like Cabo patria here not as frequented as they could be a fact the government says it now wants to change Ana is ready for change her souvenir shop in Kakaako patria gets its first visitors of the afternoon the town is one of several in the Troodos mountains facing declining numbers of tourists government talk of reviving tourist towns like hers is raising her hopes I think it's a very good idea because I'm living in the mountain and we'll be very happy to have more tourists because we are living you know all of us will need some jobs here the government is unveiling a plan to increase visits to tourist spots left out of the boom 16 million euros are being set aside to upgrade infrastructure and another million to improve hotels s to give a new brand of cybers in a lot of areas the mountains for example to find out the way of life of the Cypriots not only on the beaches but on the mountains as well that way of life is struggling in those mountains as visitors dwindle sodas business and people end up migrating to cities a newspaper can pass the time when you hardly have a customer in your restaurant but it won't reveal the new chapter for your town for that many are hoping the government's initiative will rescue them from a sticky situation and that is our show for this week remember you can get in touch with us by tweeting me at has MC Kerr and do use the hashtag a JCTC when you do or drop us an email counting the cost at Al Jazeera dotnet is our address and there's more for you online at Al Jazeera comm CTC that'll take you straight through our page which has individual ports links and entire episodes for you to catch up on that's it for this edition of counting the cost I'm handsome seeker from the whole team here thanks for joining us the news on al Jazeera is next you

Channel: Al Jazeera English

Views: 156,686

Keywords: saudi arabia, japan, shanghai international energy exchange, aljazeera, tourism, business development, aljazeera english, al jazeera english, crude, dollar, asia pacific, asiapacific, oil, tech giants, us dollar, gas, currency, aljazeera live, cyprus, energy, renminbi, africa ceo forum, somalia tax, solar power, al jazeera, barrels, stock market, china, business & economy, finance, petro dollars, softbank, China's 'petro-yuan', petro-yuan, dollar hegemony, bretton woods, petro yuan

Id: hQKf1Ob2Iys

Length: 25min 52sec (1552 seconds)

Published: Sat Mar 31 2018