Good news first Australia in the first reading.. And the devil is in the detail. For America..
The restart of the coal trade, which is important to Australia and crucial to China has a condition. The payments will be made and accepted in Chinese Yuan, not $US.
Now for years I have been waffling on about China wanting to remove America as the global trading power. And the one thing that has prevented that is the $US being the worlds go to currency. Everyone has to buy or sell $US to trade efficiently..(Since the gold standard went the way of the Dodo.)
Now America used to be THE trade powerhouse. Importing and exporting. But it isnt any more. It doesnt export anywhere near what it imports. So why is the $US still the currency and what does it mean? The first part is habit, and the fact just about everyone owns $US (or is owed them by America if truth be told.) The difference it makes to America is that is sells its own currency and takes a commission on every sale. So effectively skimming world trade. The other part is, no one who is owed a debt in $US wants to see the value of that debt halve against their own currency, be it The Peso, Derum, Sterling or Euro, when the value of the Dollar collapses, which it will if demand dies.
Now fast forawrd to the start of the Russia adventure in Ukraine. The Chinese proposed opening a foreign trading house, to bypass $US trade sanctions on Russia, taking the US out of the global trade loop. If the idea had taken off, it would have been the begining of the end for America as a global economy.. But the idea died. The Chinese can afford to wait for other opportunities and they just found one, in cancelling the coal war with Australia, if Australia takes their currency instead of the $US. And this time it worked. You will find China offering similar deals to other countries now, to "normalize" trade. What we are witnessing is China punching a hole in the rubber raft that is keeping the US economy afloat. I should remind people that the Chinese dont have to make their currency the new one.. They just have to get the $US out of the game and watch the economy crumble as the currency devalues to maybe half the cuurent rate, and everything America imports doubles in price.. Questions anyone?😷
