China and Russia, two of the world’s strongest nations and allies, are joining hands to dethrone the US dollar. While Russia has already urged the Middle East oil producers to ditch the USD, China has also joined Russia’s anti-USD endeavor to bolster the process.
Both nations have unanimously decided to restrict the use of the US dollar as their primary currency for trading. China and Russia are both exploring multipolar currency initiatives, which include deploying the Ruble and Yuan as currencies for primary trade and economic interaction between the two nations instead of the US Dollar.
Also Read: US Dollar Fails to Surpass Nigerian Naira Despite Outpacing Yuan & Yen
China and Russia to Conduct Billions Worth of Trade Without Using USD
Per S.L. Kanthan, a notable political analyst and podcaster on X, China, and Russia will be engaging in trade worth $260 billion without using a single USD in exchange for commodities purchased. Kanthan later shared how both nations will be conducting the trade using Ruble, Yuan, and Euros, thereby introducing a solid case for de-dollarization.
“$260 billion worth of trade between China and Russia this year… But almost no US dollar will be used! It will be 95% Chinese yuan and Russian rubles. Maybe some euros are involved. This de-dollarization will soon be replicated among all BRICS+ members.”
The analyst shared how this ideology of ditching the USD may soon be replicated and adopted by the rest of the BRICS nations, who are joining hands collectively to dethrone the US and the USD’s status as the global reserve currency.
This isn’t the first time China and Russia have stopped trading in the USD. The de-dollarization initiative was already under construction and had ramped up in 2023 when both nations officially started trading in Yuan and Ruble.
Russia has been trading in Yuan for a while, purchasing goods and commodities from leading nations. The list includes trading with Mongolia, the Philippines, Malaysia, the United Arab Emirates, Thailand, Japan, Tajikistan, and Singapore.
The US May Impose Sanctions on Chinese Banks
In recent developments, the US is now spearheading a process to sanction Chinese banks by limiting their capacity to help Russia. Per WSJ, the US suspects that increasing trade channels between Russia and China are aiding Moscow’s military prowess. The US expressed skepticism adding that the rise in Russian military power may prove negative for Ukraine.
The report further cited unnamed US officials, adding that the US might prepare draft sanctions targeting specific Chinese banks. This step aims to specifically curb Beijing’s ability to help Mosocow in any possible way.
However, a new Reuters report has shared that the US authorities have shelved plans to sanction the Chinese banks as of now. The report also mentions that the authorities may use the act of diplomacy to curb the current situation.