Russia, China move towards deal to switch away from the US dollar
In Americans what the harm in upsetting Russian Prime Minister Vladimir Putin could be, his latest statement on the deal between his nation and China should clarify things. Putin confirmed plans and dealings to move away from the US dollar and switching to the ruble and the yuan in settlements in energy and financial markets.
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“Payments in rubles and yuan are very promising. Switching to such a large-scale work means that the impact of the dollar on the global energy sector will objectively decline. This is not bad either for the global economy, or the world of finance and the world energy markets,” Putin said at a meeting of the APEC Business Summit.
“It will help expand our capabilities in mutual trade and influence both world financial and energy markets,” the president said.
Russia’s oil giant Rosneft and China National Oil and Gas Exploration and Development Corporation signed an agreement on the acquisition of a 10 percent stake at Vankorneft, a Rosneft subsidiary that develops oil in Russia’s Eastern Siberia.
“In cooperation with the country [China – Ed.] we intend to use the national currency more widely in mutual settlements,” Putin said.
Putin added that making payments in national currency is planned particularly in oil trade. “Our experts are assessing such possibilities,” he said.
“Much attention has been paid to the topic of mutual payments in yuan in a variety of areas, including such sensitive ones as military and technical cooperation. This will help to strengthen the yuan as a reserve local currency”, said the Russian president’s spokesman Dmitry Peskov after Putin met with China’s President Xi Jinping on Sunday.
Chinese politicians try to keep the value of the yuan down against the dollar in order to subsidize their export sector (mostly to the U.S.), but unfortunately, this is at the expense of all of the consumers living in China.
Wealth Daily noted back in March, “The other major problem with the yuan, unlike the dollar and the other major currencies, is that it is not freely floating. As long as the yuan does not trade openly on a global basis, it will not be a reserve currency.”
The BRICS countries — Brazil, Russia, India, China and South Africa, a bloc of the world’s five major emerging economies — have long sought to diminish their dependence on the dollar as a means of reshaping the world financial and geopolitical order. In the absence of a viable alternative, however, replacing it has proved difficult.
For its part, “China sees the dominance of the dollar in international trade transactions as a remnant of American global dominance, which they hope to overthrow in the years ahead,” said Michael Klare, a professor of peace and world security studies at Hampshire College. “This is a small step in that direction, to reduce the primacy of the dollar in international trade.”
