Russia and China pledged on Tuesday to settle more bilateral trade in ruble and yuan and to enhance cooperation between banks, First Deputy Prime Minister Igor Shuvalov said, as Moscow seeks to cushion the effects of Western economic sanctions.
Shuvalov told reporters in Beijing that he had agreed an economic cooperation pact with Chinese Vice Premier Zhang Gaoli that included boosting use of the ruble and yuan for trade transactions. The pact also lets Russian banks set up accounts with Chinese banks, and makes provisions for Russian companies to seek loans from Chinese firms.
"We are not going to break old contracts, most of which were denominated in dollars," Shuvalov said. "But, we're going to encourage companies from the two countries to settle more in local currencies, to avoid using a currency from a third country."
Spurred on by their often fraught relations with the U.S., Russia and China have long advocated reducing the role of the dollar in international trade. The quest to limit the dollar's dominance became more urgent for Moscow this year when U.S. and European governments slapped sanctions on Russia to penalize the country for supporting separatist rebels in Ukraine.
Washington and Brussels have excluded Russia's state banks and top energy firms from capital markets, applying measures that mean even companies not blacklisted will struggle to raise large loans outside their domestic market. For China, curtailing dollar's influence fits well with its ambitions to increase the clout of the yuan and turn it into a global reserve currency one day. With 32 percent of its $4 trillion foreign exchange reserves invested in U.S. government debt, Beijing wants to curb investment risks in dollars.
INC News, 09/09/2014
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