So the willingness of the emerging market giants to sustain business relations with Russia highlights a deep rift over Europe’s biggest crisis since World War II, and threatens to chip away the dominance of the US dollar in global trade.
“Yuan-rouble settlement has become a normal business at major banks nowadays…. We business people are already accustomed to that,” Deng said, adding yuan is increasingly popular with Russians.The sanctions are prodding Russian and Chinese companies to open accounts at Chinese banks that have subsidiaries in Russia, said a Moscow-based lawyer who represents Chinese businesses.
A source at another state lender said that, given a lack of details in the Western sanctions, the bank is closely monitoring the situation while encouraging clients to use yuan inYuan settlements already accounted for 28% of Chinese exports to Russia in the first half of 2021, compared with just 2% in 2013, as both China and Russia step up efforts to reduce reliance on the dollar, while developing their own respective, cross-border payment systems.
Yuan accounted for 13.1% of the Russian central bank’s foreign currency reserves in June 2021, compared with just 0.1% in June 2017. Dollar holdings dropped to 16.4%, from 46.3%. “Everyone is focused on maintaining or cutting existing business right now. No one is talking about new business. That’s what I’m hearing from all quarters, including Chinese clients,” said a lawyer who declined to be named.