What to say about this?
First off, it's not unreasonable to suppose that the Chinese would cut an oil deal with folks inimical to us. Their partners in current oil deals include Russia, Sudan -- and Iran. And, by the by, Venezuela -- already, and obviously without Fallows's quid pro quo, as the currency peg is still in place.
So the Chinese obviously do need oil. And if they're dealing with the genocidal regime in the Sudan, they're obviously not too fussy about where they get it. But that brings me to a second point -- it's one thing for the Chinese to offer money to an oil supplier. It's quite another to suppose that they'd be willing to allow an oil supplier (one among many --- they're cutting oil deals with Canada, fercryinnoutloud) to dictate their monetary policy. One of the reasons the Chinese deal with multiple suppliers, one can safely presume, is so that no one of them is ever in a position to make demands like this.
But not only that. Having supposed that Chavez somehow obtains this amazing influence, Fallows supposes next that he will use it to slap at our country, and not to benefit his own. As if he is as obsessed with Washington as some of Washington's chattering classes obviously are with him. Say what?
In the long term, the currency peg will go regardless. But the Chinese will do that when they think it benefits them -- and not one minute before. Much to the discomfort of Dubya's crew, which has been asking them for months, in increasingly strident tones, to drop the peg now...