Russia Shifts Trade with China to National Currencies and Cryptocurrencies, Impacting Global Economy

Russia has made a significant move in its trade with China, shifting over 90% of its imports to national currencies and cryptocurrencies, which could have far-reaching consequences for the global economy.

This move was announced by Russia’s Finance Minister, Anton Siluanov, at the 10th Russian-Chinese financial dialogue in Moscow. Siluanov reported that the number of settlements outside the US dollar-led system has risen above 90%, signifying a significant shift in the trade dynamics between the two countries.

This shift is largely driven by the sanctions imposed on Russia by the United States and its allies. In response, Russia has been actively seeking alternative payment methods, such as cryptocurrencies and digital technologies, to decrease its dependence on the US dollar.

The bilateral trade volume between Russia and China has also increased, with a 1.6% surge in the first seven months of 2024 compared to the same period last year. The two countries’ trade surplus is notably high, reaching $136.67 billion, reflecting their increasingly close economic relations.

Russia’s decision to avoid using the US dollar in its trade with China is part of a larger plan to decrease its dependence on the greenback and lessen the impact of possible sanctions. By using their national currencies, the yuan and ruble, Russia and China can avoid the need for dollar-denominated transactions that may result in US sanctions.

The decentralized nature of cryptocurrencies and other decentralization strategies make them a viable option for international trade. Although the Russian government has not identified any particular cryptocurrencies, they have been actively investigating their potential for trade.

In fact, a new law was recently passed in Russia to establish experimental legal frameworks for cryptocurrency use in international commerce, which is expected to be in place in September. By enacting this legislation, it could result in the incorporation of cryptocurrencies into trade, not only between Russia and China but also with other nations.

The consequences of Russia’s decision to de-emphasize its dependence on the US dollar in its transactions with China are significant; it may undermine the dollar’s dominance in global commerce, which has been a fundamental aspect of economic power for many years.

Furthermore, it has the potential to transform the global financial system, as other nations may also adopt Russia’s approach and explore alternative payment methods. For Russia, the use of national currencies and cryptocurrencies in trade provides an advantage over its dependence on the US dollar, decreases transaction expenses, and presents an alternative to traditional payment systems.

In addition, it also strengthens economic ties between the two countries, which are increasingly becoming important trading and investment allies. In the long term, Russia’s move could lead to a more decentralized/multipolar international monetary system where multiple payment systems exist under different currencies.

The shift away from the US dollar in trade with China could result in more stability and resilience in global trade, as countries are no longer reliant on a single currency. This move is significant because it highlights how Russia has made bold moves to avoid using the same currency as China, which could have dire consequences for international trade and finance.

For more insights on the impact of Russia’s shift to national currencies and cryptocurrencies on the global economy, read “Russia and China’s Embrace of Cryptocurrency in International Trade: What It Means for the Global Economy” on CoinSeeks.com.