China’s Vice President Wang Qishan has called on Russia to boost financial cooperation between the two states, namely by increasing the usage of national currencies in bilateral trade. In addition to this, Wang Qishan suggested supporting the Russia-China forum on investments.
The Chinese politician's statements are in line with an offer from Russian President Vladimir Putin, who suggested that both China and Mongolia join the Russian Central Bank's financial messaging system and increase the use of national currencies in mutual trade. The president stressed that many countries, specifically Russia, are expressing interest in abandoning the current practice of using the dollar amid instability in global financial markets.
During the St. Petersburg International Economic Forum, Putin slammed the US government for turning the dollar into a tool to put pressure on other countries. He also called on other states to review the dollar's current status in light of Washington's behaviour.
The trend of abandoning the US currency has been seen in a recent report on the economies of the BRICS countries, which include both Russia and China, as they have reduced the use of the greenback in mutual trade by 20%. Additionally, according to the latest report, China has slashed its share of US Treasury securities by $67.2 billion, or 5.6%, over the last year, while at the same time actively boosted its gold reserves.
Beijing has been engaged in a costly trade war with the US since 2018, with hundreds of billions of dollars’ worth of goods being slapped with hefty tariffs by both sides. Since the end of last year, the two countries have been negotiating a new trade deal to end the conflict, but this has so far been unsuccessful.
Recently, US President Donald Trump introduced another round of 20% tariffs on around $200 billion worth of Chinese goods, citing a lack of progress in talks with Beijing. He also threatened to impose heavy duties on another $325 billion of goods if the sides do not ink a trade deal in the near future, adding that he has a feeling that a breakthrough could happen at the G20 summit in Japan.
Moscow has also suffered from unilateral American actions after the US started imposing sanctions against Russia under various pre-texts. The Kremlin has slammed these moves as tools of unfair competition and is challenging them at the World Trade Organisation.
Russia dumped most of its holdings in US government bonds in 2018 amid one of the sanctions waves, focusing instead on buying gold. In recent years, Moscow has also actively been promoting the idea of switching to national currencies in trade with various foreign partners, such as Turkey, India, and China.