Study On The Fragility Of The Petrodollar System

In the wake of the Bretton Woods system collapse,the United States strike a deal with Saudi-led OPEC petroleum exporting countries to establish a Petrodollar System,for the purpose to elevate the U.S.dollars as the world's dominant currency.The mechanism of Petrodollar system involves five sections consisting of valuation,accumulation,possession,expansion and recycling.As the worldwide accepted monetary system,it promotes the link between participants of international oil trade and the development of global economy,leading profound influence to the world politics,the international economics,as well as the global energy pattern.Nevertheless,the constant changing and the development of world politics,along with the advance of science and technology,all has challenged the dominance of Petrodollar System internally and externally.Therefore,to deeply explore the existing pressure and its fragility is of great theoretical and practical significance for us to carry out coping strategies.This study critically analysed the fragility of the Petrodollar System by systematic review of research literatures,relevant theories and definitions,aiming to offer an in-depth research in the following aspects,including 1)the evolution and development characteristics of the Petrodollar System and its fragility;2)the operational framework and mechanism of the Petrodollar System;3)the existing fragility and confronting risks of the Petrodollar System;4)the internal and external factors result in its fragility;5)the recent situation and severity in long-term development;6)the policies and strategies our country proposed in coping with the fragility of the Petrodollar System.The research was discussed in 10 chapters,as outlined below.Chapter 1 introduced the research background and significance of the study,and interpreted the innovation and shortcomings in existing academic results.Chapter 2 systemically reviewed previous theories and studies of the Petrodollar System and its fragility,offering theoretically foundation to the following analysis regarding to its origin,impacts and trends.Chapter 3 defined concepts related to the Petrodollar System;analysed the formation of the system in basis,condition,motivation and sign,and the broad effect on the world economic developments.This chapter also compared the evolution of the Petrodollar System in different periods,deeply explored the development characteristics of the system at all stages.Chapter 4 by study the interior logic and operating mechanism demonstrated the operating foundation and requirements of Petrodollar System,and meanwhile interpreted the features and rules of the stability and fragility that coexisting in system operating.On the basis of understanding its conceptions and operating mechanisms,Chapter 5 defined the fragility of the Petrodollar System,explained its objectivity and inevitability of existence.In addition,it listed a series of factors that trigger the fragility of the Petrodollar System,including the fluctuation of international oil price,the interference suffered from operating the system and the changing of relationship between the U.S.and petroleum exporting countries in the Middle East.Chapter 6 internally and externally summarized the impact and pressure that the Petrodollar System confronted with using materialistic and dialectical method.Specifically,the interior causes of fragility came up with the intrinsic contradiction exhibited in operating mechanism,the constant changing of conventional petroleum interest pattern,and the persistent low oil price cycle.The external reasons were indicated as the promotion of low-carbon economy,the application of new energy resources,the changing of the world economic situation,along with the development of the advanced shale gas technology.Chapter 7 in combination with analytic hierarchy process(AHP)as innovative point interpreted the interior and exterior factors lead to the fragility of the Petrodollar System,and evaluated the extent of those factors from three aspects covered with exposure,susceptibility and in adaptability,and hence offered theoretical support and coping strategies in the face of the development of the Petrodollar System fragility.Chapter 8 predicted the development trend of the Petrodollar System fragility.In the short to medium term,with the support of comprehensive national power in the U.S.,the Petrodollar System was able to correct and adjust the fragility relying on its repair capability,and to maintain proper functioning as the international monetary system.However,as can be seen that the application of new energy resourcescontinually challenged the dominant position of petroleum.The rapid development of emerging economies impacted greatly on the status of old system.A novel monetary system that accord with the common interest of most countries in the world will be created eventually.Chapter 9 put forward the theoretical consideration of future energy strategies for China.In the new normal economy period,as the representative of emerging economies,China should properly understand the developing trend of the Petrodollar System fragility and ensure energy security.With the pursuing of the Belt and Road Initiative,China should establish cooperative mechanisms along the routes to expand energy import.In addition,China will improve the establishment of domestic financial markets,actively make progress in RMB internationalization,and make great efforts in promoting RMB as petroleum valuation system.Furthermore,China will strive to enhance the development and application of new energy technologies,enrich the diversity of domestic energy structure and the cleaning of energy use.Chapter 10 summarized and concluded main views mentioned in this study.