90% of China-Russia Trade Now Flows in Ruble & Yuan
It should be noted that the de-dollarization trend in recent years takes on more and more extensive dimensions, and the exchange of goods between countries, and in particular, the US trade for China and Russia, is carried out in national currencies in addition to the US dollar – the yuan and the ruble. This is especially significant, as it confirms the radical nature of the changes in the modern world’s economic process and validates confidence that the US dollar will soon undergo significant change.
De-dollarization is defined as the dependence on the US dollar in international trade structures and in finance. Such a trend develops rapidly since more and more countries are striving to reduce dependence on the variations in the US dollar’s exchange rate and ensure economic sovereignty. This issue manifests itself most clearly in China and Russia, as these two countries have already reached 90% of the yuan and ruble rate in bilateral trade.
🇨🇳🇷🇺 Vladimir Putin:
“90% of all trade between China and Russia is conducted in Ruble or Yuan after ditching the US Dollar”
*Many other countries will gradually join this new system of operation.
Many dollars in the world will become “surplus”.
Inflation will be brutal… PIC.TWITTER.COM/BQIVRTZMST
— Megatron (@Megatron_ron) MAY 16, 2024
The role of the national currencies is to protect the economies of China and Russia from the instability of the American dollar. Exchange with each other using ruble and yuan, they close the risk of unpredictable changes in the rate of the American currency in the form of negative consequences for their economy.
The process of conduct has accelerated even more amid the imposition of Western sanctions against Russia. With a limited economic presence in the Western market and restrictions imposed for eastern countries, China became the final trading partner. This established a high degree of interdependence that has promoted their national currencies’ domination in the political economy.
What both countries have in common is their aspiration to gain more control over the economy. Minimizing the US dollar’s influence allows China and Russia to preserve its financial sovereignty and become more stable.
The China-Russia de-dollarization process is also supported by impressive numbers. More than 90% of trade is already done in yuan and ruble. The growing volume of trade was confirmed by $200 billion of mutual turnover only in one year.
None of this history of de-dollarization is limited to the above-mentioned China and Russia. Other countries are more likely to leverage their alternatives in the long run. There were some talks and fears of the BRIC countries -Brazil, Russia, India, and South Africa, creating a unified currency to compete with the US dollar. However, experts from most sources called fear-mongering and low probability.
In any case, the dollar remains the majority currency. As of 2022, 54% of the world’s central bank currency reserves were in dollars, and 88% were traded for dollars. So many years have passed that it will be challenging to change anything. This will be a slow process, or it will be explained by the force majeure of incredible proportions.
There could be diversified consequences of decoupling from the US dollar on global economics, one of which is inflation in the United States and Europe. Now de-dollarization might be expected to impact the position of the dollar in trading, other factors, such as the structure of monetary policy, regulatory economics, domestic and foreign incorporation, and supply chains, are still of high importance in establishing the change in the inflationary cost. Therefore, central banks and policymakers will still retain their role in the change.
Lastly, de-dollarization is a trend that shows the tendency of expansion. The first proofs are that China and Russia rapidly start de-dollarizing payments and turning them into yuan and ruble. One can only guess what consequences may come in the long run, but the fact that overall trends in the world economics is evident. The USA dollar will most likely stay the most widely used currency; it is no longer the only one.
Meanwhile, China and Russia have been de-dollarizing in response to sanctions and moving to increase their economic sovereignty by becoming less dollar-vulnerable. The potential consequences of their actions and the examples to be followed have drawn the more general picture for the global economy. Nonetheless, it is evident that the dollar persists to be a powerful force in the international financial world nowadays.
