China and Russia trade in rubles and Yuan, farewell to the U.S. dollar
Moscow (AsiaNews / Agencies) – Since Thursday last China and Russia have been taking part in the 9th meeting of prime ministers of the countries of the Shanghai Cooperation Organisation (SCO) in Dushanbe (Tajikistan), for cooperation on security and the economy in Central Asia. Meanwhile, Moscow and Beijing have decided to carry out trade in their own currency (ruble and yuan) instead of U.S. dollars.
The SCO countries (Russia, China, Tajikistan, Kyrgyzstan, Kazakhstan and Uzbekistan) are in agreement in increasing cooperation in the region against terrorism and extremism, especially of a religious nature, as SCO Secretary-General Muratbek Imanaliev reiterated. China is seeking help from neighbouring countries especially against the East Turkistan Islamic Movement which it accuses of terrorism in Xinjiang.
Moreover the SCO, founded as security cooperation, is increasingly taking on the character of a privileged forum for economic cooperation, even among the Central Asian states. Various other countries like India and Iran, have for some time now attended the meetings in anticipation of a possible entry into their group. Chinese Premier Wen Jiabao met with Tajik President Emomali Rahmon to discuss increased trade and agreements in electricity, transport, minerals and border security.
The Chinese premier also proposed to establish an SCO Development Bank, which would take care of investments and benefits, so as to strengthen and facilitate trade agreements. This bank would in fact would give greater weight and convertibility to the currencies of respective countries.
In recent days, Wen, who is visiting Russia, and Russian Prime Minister Vladimir Putin announced that the two countries will henceforth conduct trade in their own currencies rather than the U.S. dollar. For decades the dollar was the global trade currency, while the ruble and the yuan were barely used because they are not accepted in international trade and have exchange rates set by governments that do not correspond to rules of the market. After the global financial crisis and sharp losses in the dollar, states are experimenting with alternatives.
Putin said the agreement "reflects the consolidation of the financial systems of both countries." Even if these currencies are still exempted from the laws of the market, however, Moscow and Beijing are now important and desirable trading partners. Since 22 November, the ruble is traded against the yuan in the Chinese interbank market and from December the same will be made possible in Russia. The two countries also want to work together to gain more international weight, even to the detriment of the United States, with their currencies as an alternative to the dollar.
Alongside this agreement, there have been agreements between Russian and Chinese companies worth 8.5 billion dollars. In 2008, bilateral trade was 55 billion dollars, but the crisis led to a drop to 39.5 billion in 2009.
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