by T Michael Lutas via Quora
Assuming that the petroyuan actually takes off, the US will have an inflationary impulse as petrodollars cycle back to the US at last and US Fed interest rates have to rise in order to soak them up. Assuming that the Fed doesn’t completely mishandle things, it will be a short term bump depending on the amount of petroyuan contracts.
Strategically, the bigger the petroyuan, the less room China will have to continue on its current economic road, something that will greatly advantage the United States, if the US is smart enough to take advantage of it.
China depends on economic manipulation to keep its economy going at a level far beyond what foreigners are comfortable with. China can survive the disapproval of these foreign governments and private economic players because the vast majority of yuan are kept within the borders of China where short selling yuan is not legal. The larger the yuan market outside of the PRC government control, the more likely someone will replicate George Soros’ feat when he broke the english pound. If anyone succeeds, they will make Soros look like a pauper.
Alternatively, China could clean up its act, keep honest economic books, and merrily advance its way to real world power. But it keeps those books crooked for a reason.
It is unlikely that the CCP would survive in its current role if those economic bookkeeping reforms were to happen. It is very likely that the CCP knows it because keeping crooked books is a tremendous source of inefficiency and economic misallocation for China and this is commonly known.