China-Russia dollar move may signal end to manipulation of yuan
China and Russia announced Wednesday they will no longer trade with each other using the U.S. dollar. The announcement came as top officials from China and Russia met in St. Petersburg to forge bilateral cooperation in trade and energy. The China-Russia dollar decision isn’t seen as detrimental to U.S. currency and could force the value of the yuan in line with other global currencies.
China and Russia quit using dollar for bilateral transactions China, Russia and the dollar formally ended a long relationship Wednesday. China and Russia are former enemies that required importers from each country to use a third-party currency for bilateral transactions. The dollar was the third-party currency of choice, and last year Russia-China trade was valued at $38.8 billion. Russia-China trade is expected to reach $60 billion in 2010. As of Nov. 24, either rubles or yuan must be used for all Russia-China trade.
Behind the China-Russia dollar move The Russian ruble is already traded on the Chinese stock exchange. The Chinese yuan is expected to start trading in Moscow in December. The International Business Times reports that the China-Russia dollar move isn’t intended as a challenge to the U.S. Rather, it is a precautionary measure aimed at mutual protection of the two countries’ economies in the aftermath of the global financial crisis. A China-Russia oil deal may be the main reason for the switch from the dollar. A new Siberian oil pipeline will soon pump 1 billion barrels of Russian oil into China every year. Russia wants its commodities exchange to trade for oil in rubles.
The international currency issue The China-Russia dollar move isn’t expected to change the dollar’s role in international trade. According to Joe Weisenthal at Business Insider, China and Russia switching to yuan and rubles for bilateral trade is something the world has been waiting for. The U.S. in particular wants the yuan to become a real trade currency, valued on the same level in relation to other currencies, instead of being manipulated by the Chinese government.
China and Russia quit using dollar for bilateral transactions China, Russia and the dollar formally ended a long relationship Wednesday. China and Russia are former enemies that required importers from each country to use a third-party currency for bilateral transactions. The dollar was the third-party currency of choice, and last year Russia-China trade was valued at $38.8 billion. Russia-China trade is expected to reach $60 billion in 2010. As of Nov. 24, either rubles or yuan must be used for all Russia-China trade.
Behind the China-Russia dollar move The Russian ruble is already traded on the Chinese stock exchange. The Chinese yuan is expected to start trading in Moscow in December. The International Business Times reports that the China-Russia dollar move isn’t intended as a challenge to the U.S. Rather, it is a precautionary measure aimed at mutual protection of the two countries’ economies in the aftermath of the global financial crisis. A China-Russia oil deal may be the main reason for the switch from the dollar. A new Siberian oil pipeline will soon pump 1 billion barrels of Russian oil into China every year. Russia wants its commodities exchange to trade for oil in rubles.
The international currency issue The China-Russia dollar move isn’t expected to change the dollar’s role in international trade. According to Joe Weisenthal at Business Insider, China and Russia switching to yuan and rubles for bilateral trade is something the world has been waiting for. The U.S. in particular wants the yuan to become a real trade currency, valued on the same level in relation to other currencies, instead of being manipulated by the Chinese government.
Russia and China Quit Dollar
St. Petersburg, Russia - China and Russia have decided to renounce the US dollar and resort to using their own currencies for bilateral trade, Premier Wen Jiabao and his Russian counterpart Vladimir Putin announced late on Tuesday.
Chinese experts said the move reflected closer relations between Beijing and Moscow and is not aimed at challenging the dollar, but to protect their domestic economies. "About trade settlement, we have decided to use our own currencies," Putin said at a joint news conference with Wen in St. Petersburg.
The two countries were accustomed to using other currencies, especially the dollar, for bilateral trade. Since the financial crisis, however, high-ranking officials on both sides began to explore other possibilities.
The yuan has now started trading against the Russian rouble in the Chinese interbank market, while the renminbi will soon be allowed to trade against the rouble in Russia, Putin said.
"That has forged an important step in bilateral trade and it is a result of the consolidated financial systems of world countries," he said.
Putin made his remarks after a meeting with Wen. They also officiated at a signing ceremony for 12 documents, including energy cooperation.
The documents covered cooperation on aviation, railroad construction, customs, protecting intellectual property, culture and a joint communiqu. Details of the documents have yet to be released.
Putin said one of the pacts between the two countries is about the purchase of two nuclear reactors from Russia by China's Tianwan nuclear power plant, the most advanced nuclear power complex in China.
Putin has called for boosting sales of natural resources - Russia's main export - to China, but price has proven to be a sticking point.
Russian Deputy Prime Minister Igor Sechin, who holds sway over Russia's energy sector, said following a meeting with Chinese representatives that Moscow and Beijing are unlikely to agree on the price of Russian gas supplies to China before the middle of next year.
Russia is looking for China to pay prices similar to those Russian gas giant Gazprom charges its European customers, but Beijing wants a discount. The two sides were about $100 per 1,000 cubic meters apart, according to Chinese officials last week.
Wen's trip follows Russian President Dmitry Medvedev's three-day visit to China in September, during which he and President Hu Jintao launched a cross-border pipeline linking the world's biggest energy producer with the largest energy consumer. Wen said at the press conference that the partnership between Beijing and Moscow has "reached an unprecedented level" and pledged the two countries will "never become each other's
enemy".
Over the past year, "our strategic cooperative partnership endured strenuous tests and reached an unprecedented level," Wen said, adding the two nations are now more confident and determined to defend their mutual interests.
"China will firmly follow the path of peaceful development and support the renaissance of Russia as a great power," he said.
"The modernization of China will not affect other countries' interests, while a solid and strong Sino-Russian relationship is in line with the fundamental interests of both countries."
We said Beijing is willing to boost cooperation with Moscow in Northeast Asia, Central Asia and the Asia-Pacific region, as well as in major international organizations and on mechanisms in pursuit of a "fair and reasonable new order" in international politics and the economy.
Sun Zhuangzhi, a senior researcher in Central Asian studies at the Chinese Academy of Social Sciences, said the new mode of trade settlement between China and Russia follows a
global trend after the financial crisis exposed the faults of a dollar-dominated world financial system.
Pang Zhongying, who specializes in international politics at Renmin University of China, said the proposal is not challenging the dollar, but aimed at avoiding the risks the dollar represents.
Wen arrived in the northern Russian city on Monday evening for a regular meeting between Chinese and Russian heads of government.
He left St. Petersburg for Moscow late on Tuesday and is set to meet with Russian President Dmitry Medvedev on Wednesday.
Agencies and Zhou Wa contributed to this story.
http://patriotsforamerica.ning.com/forum/topics/china-russia-quit-dollar?commentId=2734278%3AComment%3A213319&xg_source=activity
Chinese experts said the move reflected closer relations between Beijing and Moscow and is not aimed at challenging the dollar, but to protect their domestic economies. "About trade settlement, we have decided to use our own currencies," Putin said at a joint news conference with Wen in St. Petersburg.
The two countries were accustomed to using other currencies, especially the dollar, for bilateral trade. Since the financial crisis, however, high-ranking officials on both sides began to explore other possibilities.
The yuan has now started trading against the Russian rouble in the Chinese interbank market, while the renminbi will soon be allowed to trade against the rouble in Russia, Putin said.
"That has forged an important step in bilateral trade and it is a result of the consolidated financial systems of world countries," he said.
Putin made his remarks after a meeting with Wen. They also officiated at a signing ceremony for 12 documents, including energy cooperation.
The documents covered cooperation on aviation, railroad construction, customs, protecting intellectual property, culture and a joint communiqu. Details of the documents have yet to be released.
Putin said one of the pacts between the two countries is about the purchase of two nuclear reactors from Russia by China's Tianwan nuclear power plant, the most advanced nuclear power complex in China.
Putin has called for boosting sales of natural resources - Russia's main export - to China, but price has proven to be a sticking point.
Russian Deputy Prime Minister Igor Sechin, who holds sway over Russia's energy sector, said following a meeting with Chinese representatives that Moscow and Beijing are unlikely to agree on the price of Russian gas supplies to China before the middle of next year.
Russia is looking for China to pay prices similar to those Russian gas giant Gazprom charges its European customers, but Beijing wants a discount. The two sides were about $100 per 1,000 cubic meters apart, according to Chinese officials last week.
Wen's trip follows Russian President Dmitry Medvedev's three-day visit to China in September, during which he and President Hu Jintao launched a cross-border pipeline linking the world's biggest energy producer with the largest energy consumer. Wen said at the press conference that the partnership between Beijing and Moscow has "reached an unprecedented level" and pledged the two countries will "never become each other's
enemy".
Over the past year, "our strategic cooperative partnership endured strenuous tests and reached an unprecedented level," Wen said, adding the two nations are now more confident and determined to defend their mutual interests.
"China will firmly follow the path of peaceful development and support the renaissance of Russia as a great power," he said.
"The modernization of China will not affect other countries' interests, while a solid and strong Sino-Russian relationship is in line with the fundamental interests of both countries."
We said Beijing is willing to boost cooperation with Moscow in Northeast Asia, Central Asia and the Asia-Pacific region, as well as in major international organizations and on mechanisms in pursuit of a "fair and reasonable new order" in international politics and the economy.
Sun Zhuangzhi, a senior researcher in Central Asian studies at the Chinese Academy of Social Sciences, said the new mode of trade settlement between China and Russia follows a
global trend after the financial crisis exposed the faults of a dollar-dominated world financial system.
Pang Zhongying, who specializes in international politics at Renmin University of China, said the proposal is not challenging the dollar, but aimed at avoiding the risks the dollar represents.
Wen arrived in the northern Russian city on Monday evening for a regular meeting between Chinese and Russian heads of government.
He left St. Petersburg for Moscow late on Tuesday and is set to meet with Russian President Dmitry Medvedev on Wednesday.
Agencies and Zhou Wa contributed to this story.
http://patriotsforamerica.ning.com/forum/topics/china-russia-quit-dollar?commentId=2734278%3AComment%3A213319&xg_source=activity
