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The economic cooperation between China and Russia has always attracted global attention.
Recently, the acceleration of de-dollarization in China and Russia has caused widespread discussion in the market.
There are growing signs that China and Russia seem to be seeking a way out of dollar dependence, but will this cut off America's retreat in one fell swoop?
Background to de-dollarization: from the financial crisis to geopolitics
The post-financial crisis world economic landscape has undergone profound changes.
As the center of the global financial system, the hegemony of the US dollar has been challenged to a certain extent.
China and Russia, dissatisfied with the dominance of the dollar and concerned about their own economic security, have begun to accelerate the process of de-dollarization.
According to the Central Bank of Russia, between 2014 and 2023, the share of the dollar in Russia's foreign exchange reserves fell from 46% to 16%.
China has also made significant moves in de-dollarization. In recent years, China has stepped up the internationalization of the renminbi, expanding its use in international trade through platforms such as the Belt and Road Initiative and the Asian Infrastructure Investment Bank.
According to the People's Bank of China, the share of RMB in global foreign exchange reserves has risen to 2.5% in 2023, while the share of US dollars has fallen to 58%.
Specific initiatives for de-dollarization: from energy to finance
China and Russia have taken a variety of measures to de-dollarize, covering energy, finance and other fields.
The first is cooperation in the field of energy.
China and Russia are at the forefront of energy cooperation.
According to Gazprom, in 2023, about 30% of the gas supply contracts signed by the parties were settled in yuan and rubles.
In the financial sector, China and Russia are also actively promoting de-dollarization.
In 2020, the central banks of China and Russia signed a local currency swap agreement aimed at facilitating trade and investment between the two countries.
According to the People's Bank of China, as of 2023, the amount of local currency swaps under this agreement has reached 300 billion yuan, or about 450 billion rubles.
In addition, China and Russia are pushing for the creation of a payment system that is independent of the SWIFT system.
It is rumored that Russia's SPFS system and China's CIPS system are gradually becoming interconnected, providing technical support for the de-dollarization of the two countries.
According to the Central Bank of Russia, as of 2023, about 20% of international payments processed by the SPFS system are settled in yuan.
Regional economic dynamics: changes from Moscow to Shanghai
The process of de-dollarization has had a profound impact on the economic dynamics of major cities in China and Russia.
Moscow, as the political and economic center of Russia, has a prominent financial market in the process of de-dollarization.
In recent years, the structure of foreign currency transactions on the Moscow Stock Exchange has changed significantly.
According to the Moscow Stock Exchange, in 2023, the volume of transactions in the ruble and the yuan increased by 40%, while the volume of the dollar decreased by 20%.
This change reflects the gradual reduction of Russia's dependence on the dollar in international financial markets.
Shanghai, as China's financial center, has also played an important role in the de-dollarization process.
In recent years, Shanghai has accelerated the pace of RMB internationalization. According to data from the Shanghai Clearing House, in 2023, the value of cross-border transactions settled in RMB increased by 30% year-on-year.
Shanghai's pilot free trade zone is also actively exploring new models of financial opening-up, providing strong support for the internationalization of the renminbi.
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