Yuan more preferable as China, Russia de-dollarize trade
Overcoming western sanctions, Russia and China are de-dollarizing their trade and opting for the Chinese yuan.
As Russia's ruble underwent a period of instability over the past few days in light of tensions with Ukraine and the West, experts said Friday the currency's volatility would not be a cause for concern for trade between Moscow and Beijing.
Trade between the two countries has shifted from the dollar to the yuan as they strive for de-dollarization, and the yuan's becoming more prominent in bilateral trade settlements is also considered a means of safeguarding Russia from the sanctions it is facing.
China's energy trade with its northern neighbor, which makes for a wide chunk of trade between the two nations, uses the US dollar, and the latter rose as high as one USD per ruble on Thursday ahead of the Russian currency's slight recovery on Friday.
Lately, agreements made it so that the trade is settled increasingly in yuan, meaning any adverse effects to the ruble would not affect bilateral energy trade.
Chinese-Russian trade has been surging lately, with their goods trade increasing by nearly 36% year-on-year in 2021, amounting to nearly $146.9 billion, Beijing's official data showed, as China has been Russia's top trading partner for the last 12 years.
Chinese energy imports from Russia soared 47.4%, an increase of more than $52.9 billion from 2021, making for more than 65% of China's total imports from Russia.
Russia's Sputnik news agency reported Friday that Gazprom, the oil giant behind Nord Stream 2, said it became the first company in the federation to entirely opt-out from using the USD in trade in favor of the Chinese yuan.
Gazprom Neft also has plans to switch to yuan settlements on jet fuel in the ruble for Chinese airlines in Russian airports by the end of the year, the same outlet said.
The ruble has been recovering due to the Russian central bank intervening in the market, as the body vowed to "use all necessary instruments to maintain the financial stability and business continuity of financial institutions."
The Bank of Russia also prohibited short sales in its exchange and over-the-counter markets, effective Thursday.
Even the Russian stock market made up some ground from the losses it sustained on Thursday when it took a huge plunge in light of the latest developments in Eastern Europe.
The European Union has agreed Friday to freeze European assets linked to Russian President Vladimir Putin and Foreign Minister Sergei Lavrov over Moscow's operation in Donbass.
The tsunami of sanctions that Russia is repeatedly telling the west has no effect come in light of leader Vladimir Putin authorizing a special military operation in Donbass over the constant Ukrainian shelling of Lugansk and Donetsk People's Republics, whose independence Moscow recognized a few days ahead of the operation.
Moscow's ministry of foreign affairs informed the international community the operation in Ukraine was not the beginning of a war, but rather an attempt at curbing one after the west bombarded the situation with condemnations.
Russia has for months been warning of the threat posed against it by NATO's attempts to expand eastward, which happened simultaneously with an increase in NATO military activity along Russia's borders, and batches of lethal weapons being sent to Ukraine, prompting Russia to request security guarantees from the West. Washington failed to provide the guarantees.