Russia conducts 90% of trade with China using national currencies

Russia has achieved a significant milestone in its bilateral trade with China, with over 90% of transactions now conducted using national currencies, specifically the ruble and the yuan.

This shift is a strategic move to mitigate risks associated with using what Russian officials refer to as "unfriendly" currencies, particularly in light of increasing global economic pressures.

Russian Finance Minister Anton Siluanov announced this development during the tenth Russian-Chinese financial dialogue in Moscow, emphasising the importance of conducting trade in "friendly" currencies.

Siluanov highlighted that moving away from the U.S. dollar is crucial for protecting Russia's economic interests amid geopolitical tensions and potential sanctions.

The bilateral trade between Russia and China has been growing steadily, with Chinese customs data showing a 1.6% increase in trade turnover during the first seven months of 2024, totaling $136.67 billion.

Siluanov noted that this growth could lead to the trade turnover surpassing last year’s figures, further solidifying the strong economic ties between the two nations.

However, challenges remain. Russian companies face difficulties due to risks associated with secondary sanctions that banks might encounter when processing transactions in yuan.

To address these issues, some Russian companies are exploring alternative methods such as barter trades or using stablecoins for settlements.

The recent approval of a law regulating the use of digital assets for international payments in Russia may also enhance the adoption of cryptocurrencies in bilateral trade with China.

This development highlights Russia's efforts to reduce reliance on the U.S. dollar and strengthen its economic partnerships with China through national currencies and emerging financial technologies.