Russia and China are keen to increase the use of the rouble and yuan in bilateral trade settlements to reduce their reliance on the US dollar, Russia's ambassador to China said.
Trade between the two countries in 2018 rose 25 per cent year on year to US$108 billion, but only about 10 to 12 per cent of it was conducted in their own currencies, with the yuan accounting for more than half of the total. Both Moscow and Beijing wanted to increase that percentage significantly, envoy Andrey Denisov said in an interview.
"Both China and Russia are dissatisfied that almost everything in international payments is based on American dollars. We need more self-sufficiency. We need more autonomy," he said.
"When I say 'we', I mean not only Russia and China, but a wide range of economies. We don't want to suffer from the prevailing use of just one currency."
China is Russia's largest trading partner, while Russia is China's 10th largest. Trade between the two was strong, Denisov said.
"It's a good result," he said, talking about the 2018 figures. "And this year we will continue to grow. Maybe not as spectacularly as before, but in the first quarter of this year it still grew."
Moscow is also hoping that by using other currencies it can bypass the sanctions imposed on it by the US and other Western countries as punishment for its forceful annexation of Crimea in 2014.
Also, several US and Chinese companies and individuals have been punished for violating US sanctions on countries like Iran.
China and Russia were both victims of US sanctions, with Russia facing them directly and China indirectly, Denisov said.
"I am convinced it (the sanctions) is not a fair instrument," he said. "In the case of China and US … the US president said he really wants to pursue technical advancement through competition and not by blocking other (nation's) technologies. But that's not what we see in reality, with 5G technology for example."
The ambassador said that the problem was acknowledged around the word.
"(It's) not only us. Other countries also suffer from it," he said. "For example, if you read Hong Kong newspapers, you see the dissatisfaction of companies from different countries … (because of the) strict regulations imposed on payment mechanisms due to America's very rigid approach. Everyone wants to reduce that dependence."
Besides the direct problems associated with the US sanctions, Denisov said that their impact meant that many Russian companies and individuals now found it difficult to open bank accounts even with Chinese lenders, which preferred to play it safe by avoiding Russian transactions altogether.
The finance ministries and central banks in Moscow and Beijing were working together to develop a mechanism for increasing trade settlements using the rouble and yuan, and how it could be applied to commercial banks, he said.
"We have discussed with our Chinese colleagues how to set up an effective system that is not dependent on international payments based in dollars as it is now," he said.
"It is quite hard to cut the link because everything in the world is quite transparent, you cannot hide … But at the same time, there has to be a way to have some kind of mechanism for cooperation, if not to avoid at least to reduce the negative impact of the restrictions imposed by third-party countries."
Denisov said the two countries would continue to work towards their goal, but without making any grand statements about it.
"I don't think we need to announce it loudly. It's just a matter … of working towards it."
In the meantime, the two countries should seek to support easier financial settlements by opening more banks in each other's territory, Denisov said.
Russia currently has just one bank in operation in China, while China has two in Russia.
During his visit to China in November, Russian Prime Minister Dmitry Medvedev said the two nations were discussing the launch of a new cross-border system for direct trade settlements using the yuan and rouble.
But this was still in development and for the time being all cross-border investment projects were being settled in US dollars, Denisov said.
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