Pakistan Ditches Dollar In Trade With China In Retaliation For Trump Twitter Meltdown

Less than a day after President Trump slammed Pakistan on Twitter for failure to combat terrorism, stating, "It's not only Pakistan that we pay billions of dollars to for nothing, but also many other countries, and others," and after it was revealed that the US will withhold $255 million in aid, Pakistan's central bank announced it will be replacing the dollar with the yuan for bilateral trade and investment with China. 

"SBP has already put in place the required regulatory framework which facilitates use of CNY in trade and investment transactions," the State Bank of Pakistan (SBP) said in a press release late Tuesday, ensuring that imports, exports and financing transactions can be denominated in the Chinese currency.

"The SBP, in the capacity of the policy maker of financial and currency markets, has taken comprehensive policy related measures to ensure that imports, exports and financing transactions can be denominated in yuan," Dawn news, Pakistan's most widely read English-language daily, announced while quoting the SBP press release.


Image source: WION News

As we reported in December, Pakistan has been contemplating the move since last month's formal launch of the Long Term Plan for the China-Pakistan Economic Corridor (CPEC), signed by the two sides on November 21. The CPEC is a flagship project of China's Belt and Road initiative - the 3,000 km, over $50 billion corridor which stretches from Kashgar in western China to Gwadar port in Pakistan on the Arabian sea.

At that time the agreement was signed Pakistan's Minister for Planning and Development Ahsan Iqbal said that while Pakistani currency would be used within the country, China desired that bilateral trade should take place in yuan instead of dollars, in yet another push to de-dollarize what China considers its sphere of influence. "We are examining the use of yuan instead of the US dollar for trade between the two countries," Iqbal said in what was the earliest tip-off of this week's bombshell news, and added that the use of yuan was not against the interest of Pakistan. Rather, it would "benefit" Pakistan.

But the timing couldn't be more interesting, with the White House's rhetoric on Pakistan putting the longtime and now increasingly strained defense alliance between the US and central Asian country center stage. Less than two weeks after China and Pakistan launched their CPEC initiative, Trump said in a New Year's Day tweet, "The United States has foolishly given Pakistan more than 33 billion dollars in aid over the last 15 years, and they have given us nothing but lies & deceit, thinking of our leaders as fools. They give safe haven to the terrorists we hunt in Afghanistan, with little help. No more!"

In response to the tweet the chairman of Pakistan's Senate Defense Committee fired back, calling Trump the "mercurial leader of a declining superpower" while accusing him of merely "raving and ranting." Trump has broken ranks with prior administrations going back to the Cold War - who have taken great care to maintain a positive though uneasy status quo with the nuclear power - and in brazen tone called out Pakistani authorities for looking the other way on terrorism, especially regarding their long acknowledged support to the Taliban and toleration of jihadist groups along the pashtun tribal lands Af-Pak border border like the Haqqani network. Ironically, however, Pakistan's ISI (Inter-Services Intelligence) and the CIA were once in the same trenches when it came to supporting mujahideen fighters the region throughout the 1980's.

Pakistan has long been forced to rely on an external patron as the ultimate guarantor of its security vis-à-vis India and in recognition of the international legitimacy of its disputed borders (foremost being the Durand Line), bouncing back and forth between either China or the United States. But clearly the latest tensions as well as US plan to cut foreign aid, precipitated in the US administration's eyes by Pakistan being among an expansive list of US aid recipients that voted to support the December 22 UN resolution condemning the US recognition of Jerusalem as Israel's capital, have not only created a vacuum in terms of waning US influence in the region, but have allowed China to cement itself as both economic and political guarantor in the region. 

Notably, on the same day Trump accused Pakistan of giving "safe haven to the terrorists" Chinese Foreign Ministry spokesman Geng Shuang immediately came to Islamabad's defense, saying the country "made great efforts and sacrifices for combating terrorism" and urged the international community to "fully recognize this."



two hoots robertsgt40 Thu, 01/04/2018 - 18:45 Permalink

Much aid goes with conditions, mostly must be spent on US military equip, a subsidy for the MICs.  There is a certain amount, less than 10% that goes for administrating the aid and if it is millions or even billions that money is usually scraped off the top by the usual suspects.  May be US hooks that come with the aid are just not worth it anymore, not counting the usual suspects.  The other big loss is US influence and replacement parts/services for the military equip.

On the surface sounds good to me.

In reply to by robertsgt40

a Smudge by an… two hoots Thu, 01/04/2018 - 21:39 Permalink

I'd suggest that Pakistan's major threats are internal. It's own population (which morphs into Pakistan and India...not to mention Bangladesh...

Every now and then tensions boil up with India but India's hands are always tied to their huge Muslim population. This is probably a good thing with Modhi in power in India (radical Hindu).

I think they are gonna try to settle back into a greater tribal framework for stability if not exactly "security".

In reply to by two hoots

popeye MK13 Thu, 01/04/2018 - 18:53 Permalink

I doubt the Pakistanis have yet forgotten the US assault on a border post in that very region a couple of years ago that cost a fair few soldiers lives (not dissimilar to Deir Ezzor raid in support of ISIS, and with a similarly weak post-attack excuse). And they certainly haven't forgotten US Navy Seals running around Abbottabad on a BS PR mission.

So I reckon the Pakistanis have decided there are other potential partners around that are more reliable, and straightforward in their motivations.

In reply to by MK13

a Smudge by an… popeye Thu, 01/04/2018 - 21:45 Permalink

These neocons are so funny. Never occurs to them that Pakistan has absolutely NO MOTIVE to "clear lands" that they still have tribal ties to. Because like uh...France and Britain drew the borders in that neighborhood.

Yeah so basically they took our money and weapons and said "thanks, bye now".

Pretty funny hey neocon? You got NEO CONNED BY A PAKI! BWA HA HA HA HA!


In reply to by popeye

Freddie a Smudge by an… Thu, 01/04/2018 - 22:21 Permalink

China is like the developer building a highway and they plan on running it through Pakistan if they play ball.   The old Belt and Silk Road highway.  It makes no sense for them to still deal with the insanity of the USA.   They skimmed $33 billion and will piss off now.  The Awan klan skimmed a few million from Congress. 

Our other "ally" in the region who owns the US Federal Reserve-zio is a far bigger leach.  When will Trump cut of ALL foreign aid? 

In reply to by a Smudge by an…

mobius8curve Timmay Thu, 01/04/2018 - 18:39 Permalink

Yes or said another way deflationary for the dollar and this eventual outcome about 4 years later:

Revelation 13:16-17 And he causeth all, the small and the great, and the rich and the poor, and the free and the bond, that there be given them a mark on their right hand, or upon their forehead; (17) and that no man should be able to buy or to sell, save he that hath the mark, even the name of the beast or the number of his name.


In reply to by Timmay

veritas semper… Davidduke2000 Thu, 01/04/2018 - 20:13 Permalink

As I said in a prior post,this is Pakistan showing the birdie to US.

A few weeks ago,high ranking Pentagram officials were in Pakistan,where they tried to twist its arms. They were told to FO.

The issues were the following:

-the fact that Pakistan announced its trade in yuan(soon to be backed by Gold,bitchezz,aka sound money)

-Pakistan is part of OBOR and the 58 Bil trade investments by China(eat your heart out Murka)

-Pentagram tried to make Pakistan allow training and infiltrating terrorists from its territory into IRAN(and was told to FO)

-Pakistan said it will not continue to allow droning of its citizen by Murka

-and ,now,the gran Finale: Pakistan just announced it will cut off the supply line of Murka into Afghanistan(Murka is toast).I can hardly wait to see what happens with the US mercenaries in Afghanistan

I just want to say that all this would not have been possible without the backing of the Chinese/Russians.

They go for the US' jugular. Murka is a wounded Beast.Still dangerous because of desperation

In reply to by Davidduke2000

I am Groot veritas semper… Thu, 01/04/2018 - 20:48 Permalink

Most countries that tell the US to FO get very liberal applications of death and destruction applied to their society, with the exceptions being Russia and China. Just saying........The Pakis look like they are gonna have to learn the hard way. First getting fucked back by the US. Then they will have to get used to being on short Chinese leashes. 

In reply to by veritas semper…

a Smudge by an… I am Groot Thu, 01/04/2018 - 21:58 Permalink

They aren't the outlier here. This is part of a pattern. Think Erdogan didn't know what was coming to him? He resisted, got some help from the Ruskies, he's still in power. His country is a shambles but his people are more patriotic and defiant than ever. We tried to leverage our relationship with the Kurds next but they had other objectives and they haven't trusted us since about 1975. Next we tried to muscle Quatar into breaking with Iran. They actually started moves at a blockade. Ridiculous proposition and Quatar told us point blank to go fuck ourselves. Big fat nothing happened there. Pakistan just told us to fuck ourselves and suddenly they are in company.

So there's guys here talking about Pakistan's nukes. I've never heard they developed ICBM capability so as we ponder what they would to with them if they used them? Who more than anybody else in the region is a proxy for the USA (if not the other way around)?

Anybody want a toasted bagel?

In reply to by I am Groot

uhland62 curbjob Thu, 01/04/2018 - 19:44 Permalink

Pakistan and China are allowed to select what money they want to use. They could pay with monopoly money or declare baked beans money and pay with that. 

It's been prepared for a few years. Trump is looking to reduce outward financial drain for UN, Pakistan, Palestinians and probably others to cut the payments. Every time something happens that can be used as a motive, to make the financial cuts look as reacting to something, he'll cut and make it look like a punishment. There will be more, Egypt is a candidate, Niger and the whole of Africom should be.  

In reply to by curbjob

You Only Live Twice curbjob Thu, 01/04/2018 - 20:38 Permalink

This article is misleading. This arrangement between Pakistan and China has been in the works for months, and it's more like Trump's tweet was a threat for ditching the dollar than the other way around. You can't dump a currency in retaliation overnight. It seems that Trump has adopted the usual narrative of blaming terrorism or something of that nature for what the bankers perceive as threats to their power but is never openly stated.

In reply to by curbjob

MK ULTRA Alpha curbjob Thu, 01/04/2018 - 22:10 Permalink

The Pakistanis had to do this anyway because China made an agreement with Pakistan to use Chinese currency to finish the highway and build the port. This has been an on going story for the past two years. So Pakistan is telling us what the secret trade negotiations were about. Since NSA monitors Pakistan like a hawk, no doubt many intelligence agencies are giving assessments with quality intelligence to the president. The president was able to shape it in to a political reality for domestic consumption and receive credit for making the decision. 

Xi, the leader of China just finished assembling China's military, in a large display of strength, to tell them not to be afraid to die. This reminded me of listening to Chinese transmissions at 8th Army HQ Seoul, South Korea in 1979, the Chinese army was marching into Vietnam from the north. The army had female officer singers who sounded like birds. But the song went like this and an entire army sang it as they marched into Vietnam, "If I die don't feel sad." It was a programming mantra to march them right into the enemy with a huge wave of Chinese soldiers mindlessly singing the programming slogan. Xi is an old communist party boss and this is from his past. He has a pattern of using old techniques and methods which were proven successful.

Taiwan, East India, N/S Korea, and nations in proximity to the South China Sea, these are the next conflict regions in Asia. China plans to seize each region.

In reply to by curbjob

ReturnOfDaMac Kayman Thu, 01/04/2018 - 23:33 Permalink

No quite Kayman.  China actually makes shit, can get to space, has a world-leading infrastructure, is implementing a new silk road OBOR skills based economy, has pulled literally hundreds of millions of people out of destitute poverty and into the middle-class, and they actually do business.  The war-mongering, finger-pointing, washed-up, debt-ridden, holier than thou west, not so much.  We can still ride a few more years off of our past greatness, and once upon a time, we were really great.  Today we are a theocratic, hippocritic, faith-based has-been speeding down the highway to hell.  And we'll get there too, soon enough.

In reply to by Kayman

EddieLomax ReturnOfDaMac Fri, 01/05/2018 - 05:41 Permalink

China is still a centrally run shithole.  The fact that the US is starting to compete level with it is more due to decades of malpractice and imperial over reach than central planning finally turning out to be a good thing.


I'd say the best thing here is for the US to "lose influence" in Pakistan, whatever that means, and for Pakistan and countries like it to lose a steady stream of US tax dollars.


Long term I think we'll then see sharply diverging fortunes for China and the US.

In reply to by ReturnOfDaMac

ReturnOfDaMac EddieLomax Fri, 01/05/2018 - 11:06 Permalink

Long term is already here.  Ignoring the financial engineering and using PPP, China is already a larger economy than the USSA.  They are not bogged down in wars all over the world eating their GDP on desert hole blowing machines.  Their standard of living, even for the lower classes is rapidly rising. Ours if rapidly falling.  The OBOR initiative will employ tens if not not hundreds of millions more.  We on the other hand, will need to hire more mercenaries.  Indeed, divergence is already here.

In reply to by EddieLomax

Blankone HRH of Aquitaine 2.0 Thu, 01/04/2018 - 18:44 Permalink

No, at least not yet.
Despite the headline Pakistan has not announce they are doing this. Only that they have established the capacity to do so.
From the article: " can be denominated in yuan," that is what they said, it CAN be denominated in yuan and not that it WILL be.
Just like previous articles that claimed it had started in the headline, the article itself does not say that. Same for Iran I believe. Russia, I believe, has started trading outside the dollar but that may only be for oil/gas.

In reply to by HRH of Aquitaine 2.0