BRICS member China is convincing African nations to ditch the US dollar and trade in the Chinese Yuan for cross-border transactions. The Bank of China’s office in Zambia is pushing to increase trade in the Chinese Yuan in Southern Africa. Zambia is Africa’s second-largest producer of copper and China is the world’s biggest consumer of copper. Therefore, BRICS member China is looking to capitalize on international copper trade by making Zambia accept the Chinese Yuan and ditch the US dollar.
Zambia exports both raw and refined copper to China and the cross-border trade is worth $2 billion every year. The African country exports $1.64 billion worth of raw copper and also sends refined copper worth $340 million to China. As a whole, copper constitutes 70% of Zambia’s foreign export earnings and plays an important role in the GDP growth.
BRICS country China is pushing the de-dollarization narrative by urging Zambia to accept the Chinese Yuan as payment for copper and not the US dollar. The BRICS nation has an upper hand in convincing Zambia as it controls the supply-chain interests in Africa. If Zambia accepts China’s deal, then for the first time, $2 billion worth of copper trade will be settled in the Chinese Yuan and not the US dollar.
BRICS: Chinese Yuan Threatens the US Dollar In The International Markets
China remains to be the flag-bearer in the BRICS bloc to aggressively push the de-dollarization initiative. BRICS aims to topple the US dollar as the global reserve currency and replace it with local currencies. The move would strengthen their native economies and boost the prospects of local currencies.
However, the US dollar will be the hardest hit if such a scenario plays out in the near future. Read here to know how many sectors in the US will be affected if BRICS stops using the dollar for trade.