Chinese, Russian traders to benefit from local currency settlement

08:59, November 25, 2010      

Email | Print | Subscribe | Comments | Forum 

China and Russia will expand local currency settlements for bilateral trade, announced ChinesePremier Wen Jiabao and his Russian counterpart Vladimir Putin Tuesday, one day after the yuan started trading against Russian ruble on the Chinese interbank market.

The announcement was made at the 15th regular meeting between the Chinese premier and Russian prime minister, marking the first

step of the local currency settlement between the two countries -- the yuan's trading on the Russian forex market will follow in December.

As China's energy needs would continue to grow quickly and with Russia's increasing appetite for manufactured goods, skipping the US dollar would benefit the burgeoning trade between the two countries, said Zhang Junsheng, director of Information Center with China National Institute of WTO affiliated to the University of International Business and Economics.

Zhang said direct trade between the countries began long before at China's border goods distributing centers. Local traders had largely accepted the Chinese yuan for bilateral trades because of their confidence in its stability and China's strong economy.

It was the first time China has ever officially cooperated with a big power on local currency settlement.

Yao Zhizhong, research fellow at the Chinese Academy of Social Sciences' World Economy and Politics Institute, said the move would immediately benefit local enterprises in the two countries.

"Without exchange rate loss, they will see large reductions in trade costs, which will help China and Russia trade get back on track (to the pre-crisis level)," he said.

Although, there are concerns about China's ambitions to make the yuan into a global currency and the dollar's position. "The dollar's position in the international monetary system is too secure to rock," Zhang said.

According to Yao, the recent moves by China and Russia sent signals. One was that countries have begun to seek new channels to

avoid domestic assets being devalued by outside risks, as the dollar-dominated international monetary settlement model exposed anumber of problems during the 2008 financial crisis.

Meanwhile, it also signaled that emerging markets and countries were working closer and expected more mutual benefits while gradually steering away from cooperating with developed economies.

"However, the impact on the dollar is very small. How big a ripple can be made by a pebble in a large pool?" Yao said, adding

that though China was the world's second largest economy, its economy was too fragile and its ambition for its currency too great.

China started to allow the yuan to trade against the Russian ruble at 4.671 from Monday and will soon see the yuan trade against the ruble in Russia in December.

The ruble is the seventh currency traded on China's Foreign Exchange Trade System after the introduction of the US and Hong Kong dollars, the euro, yen, British pound and Malaysian ringgit.

Bilateral trade between the two countries is estimated to reach above 50 billion US dollars by the end of 2010.

Source: Xinhua


  • Do you have anything to say?


Special Coverage
  • Premier Wen Jiabao visits Hungary, Britain, Germany
  • From drought to floods
Major headlines
Editor's Pick
  • Chinese Navy soldiers hold an evening party marking the upcoming 62nd National Day aboard Chinese Navy hospital ship "Peace Ark" in the Pacific on Sept. 28, 2011. The Chinese National Day falls on Oct. 1. (Xinhua/Zha Chunming)
  • Photo taken on Sept. 30, 2011 shows the crowd at the plaza of Beijing Railway Station in Beijing, capital of China. The railway transportation witnessed a travel peak with the approach of the seven-day National Day holidays on Friday. (Xinhua)
  • A man wearing high-heel shoes takes part in the 3rd annual Walk a Mile in Her Shoes, an event when men literally walk in women's shoes to raise awareness about ending violence against women, at Yonge-Dundas Square in Toronto, Canada, Sept. 29, 2011. (Xinhua/Zou Zheng)
  • Photo taken on Sept. 29, 2011 shows a cargo ship in danger on the sea near Zhuhai City, south China's Guangdong Province. Cargo ship Fangzhou 6 of Qingzhou of southwest China's Guangxi Zhuang Autonomous Region lost control after water stormed into its cabin due to Typhoon Nesat on the sea near Zhuhai Thursday, leaving 12 crew members in danger. Rescuers rushed to the ship and saved them by using a helicopter. (Xinhua)
  • Actress Gong Li poses for L'Officiel Magazine. (Xinhua Photo)
  • Demonstrators from the Occupy Wall Street campaign hold placards as they march in the financial district of New York September 29, 2011. After hundreds of protesters were denied access to some areas outside the New York Stock Exchange on September 17, demonstrators set up a rag-tag camp three blocks away. Zuccotti Park is a campground festooned with placards and anti-Wall Street slogans. The group is adding complaints of excessive police force against protesters and police treatment of ethnic minorities and Muslims to its grievances list, which includes bank bailouts, foreclosures and high unemployment. (Xinhua/Reuters Photo)
Hot Forum Discussion