China and Russia need to improve relations in the economic sphere and use national currencies in bilateral trade.
The use of Western country’s currencies rather than domestic ones is viewed as entirely unnecessary, and not particularly of benefit to the national currency’s value and economy.
Additionally, conducting trade in the currency of nations which view your economic and political activity as a ‘threat’ to their interests isn’t conducive of a strong national strategy.
The chairman of the Union of Chinese Entrepreneurs in Russia, Zhou Liqun, insisted that the two countries avoid using Western currencies while adopting the practice of trading with each other in their own currencies. RT reports:
There is no need for Russian and Chinese businesses to pay each other in dollars and euros, when they can settle in rubles and yuan, according to Zhou Liqun, chairman of the Union of Chinese Entrepreneurs in Russia.
“The leaders of the two countries should think over improving relations, especially in financial cooperation. Why make payments with foreign currency? Why dollar? Why euro? They can be made directly in the yuan and the ruble,” he told RIA Novosti on the sidelines of the Valdai Discussion Club conference in Shanghai, titled “Russia and China: Contemporary Development Challenges.”
According to Zhou Liqun, American and European sanctions gave Russia and China a chance to build up trade and economic cooperation. “Of course, there are sanctions, there are problems, but there is hope and opportunity,” he added.
China is Russia’s largest trading partner, accounting for 15 percent of Russian international trade last year. In January 2018, it grew to 17.2 percent. Germany, which holds second place among Russia’s trade partners, has a share of about eight percent.
The countries have been gradually ditching the dollar and the euro in trade. In 2017, nine percent of payments for Russian imports to China were made in rubles; Russian companies paid 15 percent of Chinese imports in the renminbi. Just three years ago, the numbers were two and nine percent, respectively.
At the present, the US is levying sanctions against Russia in addition to the deck of sanctions that have already been cast against the world’s largest nation, over further rounds of alleged aggression, ranging from supporting regimes that the West doesn’t favor to hacking the world’s Democratic elections, to recognizing the will of the people of former Russian territories and protecting them against the radicalism that destabilizes the regime to which they are attached, to killing terrorists that the US is investing a lot of money, arms, and training into. Hence, the incentive for Russia to conduct trade with China using American dollars isn’t all that great.
For China’s part, they are also perceived as a threat to America’s national interests, or ‘security’ because they are developing their economy too ‘aggressively’ for the comfort of the White House. Hence, Washington has drafted and implemented successive rounds of trade tariffs against Chinese produced products, which happens to be much of what the US economy consumes, in an effort to curb Chinese industrial growth.
Thus, with economic aggression against both Russia and China emanating from the West, they are only further incentivized to conduct cooperative trade using domestic currencies in favour of the American dollar.