At the end of September 2025, China Mineral Resources Group demanded that domestic steel plants suspend purchases of Australian iron ore priced in U.S. dollars and promote the adoption of RMB settlement.
In fact, what China wants to do, has always been wanted to do, but not done, and there are people who want to do, but do not dare to do.Saddam and Gaddafi have both tried to get out of the system of trade that oil is valued in dollars, eventually stinging the nerves of the United States.
Because this move will inevitably affect the hegemony of the US dollar!
In 2000, Saddam announced that Iraq's oil exports would be priced and settled from dollars to euros. At that time, all oil sales under Iraq's "oil-for-food" program began to be priced in euros. He also exchanged $10 billion of Iraqi foreign exchange reserves from dollars to euros.
In 2003, the United States invaded Iraq and overthrew Saddam Hussein's regime on the grounds of "weapons of mass destruction". Although the official reason is not the petro-euro, Saddam's challenge to the petrodollar is one of the deep motives behind it, because it shakes the position of the dollar as the sole currency denominated in oil and threatens the fundamentals of the dollar.
Gaddafi’s plan is even more ambitious.He tries to unite Africa and Islamic nations to create a new gold dinar currency for oil and gas trade.He proposes the establishment of an African gold-backed monetary system that will sell Africa’s oil and gas resources in this new currency, thus completely bypassing the dollar and the euro.
In 2011, civil war broke out in Libya, and NATO quickly intervened militarily to help the opposition overthrow the Gaddafi regime. Again, the official reason is "protecting civilians," but there is much evidence that Gaddafi's "Golden Dinar" plan was a key factor in touching the core strategic interests of the West, especially the United States.
China's move kills two birds with one stone!
Competing for the right to pronounce the prices of commodities
At present, global commodities (such as oil, minerals, grain) are generally priced and settled in US dollars. This means that China, as the world’s largest buyer, must hold a large amount of dollar foreign exchange reserves and bear the risk of dollar exchange rate fluctuations.
As the dollar rises, the actual cost of China’s iron ore imports will rise, and are likely to suffer huge losses if they don’t take adequate measures.Changing the value of the RMB will make the cost of Chinese enterprises more stable and controllable.
Although China imports about 60%-70% of the world's iron ore, it has long been controlled by others in terms of pricing mechanisms, and China has a weak say in pricing commodities. Prices fluctuate sharply and are not conducive to downstream manufacturing.
Currently, the global pricing system for iron ore is mainly based on PGE pricing, a series of pricing benchmarks assessed and published by Standard PGE, an international energy and commodity information provider.For example, the vast majority of the world's iron ore trade associations, will agree to settle at the "Purch index average price in a particular period."Standard ore by asking suppliers, steel manufacturers, etc., to determine the basic price, but also according to their own professional judgment, according to the reliability of information, trading, volume and other factors, to give different sources of information different weight, and eventually evaluate a single price that they think can best represent the market value of the day.This process is called "window assessment."Despite the establishment of China's major commodity futures exchanges, to carry out iron ore futures trading, but the international plan is still mainly using Purch pricing.
Therefore, the transparency of the Push index should be questioned, it is easy to be manipulated by the dark box!
Although Australia is the world's richest country in iron ore resources, but not only Australia has iron ore, if China leaves China, China no longer imports from Australia, then Australia's iron ore is waste ore, customers are God", China in 2024 imports of iron ore from Australia close to 600 billion yuan, and Australia's GDP in 2024 is $1.79 trillion (about 1.4 billion yuan), China's iron ore imports contribute about 4% of GDP. It is not excessive to ask for settlement in RMB, but it is due!
Promoting RMB pricing is a crucial step in the competition for pricing power. Whoever controls the settlement currency has a greater say in the pricing mechanism. This will allow prices to more truly reflect China's supply and demand relationship, rather than being funded by international finance.
2. Promote the internationalization of RMB
To become an international currency, a currency must be widely used in international trade and investment, and commodities are an ideal “breakthrough” because of the large volume of transactions.
If iron ore, a core industrial raw material, can be successfully denominated in RMB, it will greatly stimulate the demand of overseas institutions to hold and use RMB, forming a closed loop of "importing resources → exporting RMB". This is much more stable than simply promoting the internationalization of RMB through financial channels.
After foreign miners receive the RMB, they need to find investment channels in the RMB. This will encourage them to invest in China's financial markets (such as government bonds, stocks), further deepen the opening and internationalization of China's financial markets, forming a positive cycle.
The hegemony of the US dollar lies in that almost all commodities need to be settled in US dollars. If the market needs US dollars, the Federal Reserve can issue additional US dollars. Even if inflation is inflation, it is shared by the countries holding US bonds and people holding US dollars around the world. After receiving US dollars, the party with control of resources bought US bonds and US stocks. This is also an important reason why the US stock market has been booming!