China and Russia ditch dollar in move towards ‘financial alliance’

Russia and China are partnering to reduce their dependence on the dollar — a development some experts say could lead to a “financial alliance” between them.

In the first quarter of 2020, the dollar’s share of trade between Russia and China fell below 50 per cent for the first time on record, according to recent data from Russia’s Central Bank and Federal Customs Service.

The greenback was used for only 46 per cent of settlements between the two countries. At the same time, the euro made up an all-time high of 30 per cent, while their national currencies accounted for 24 per cent, also a new high.

Russia and China have drastically cut their use of the dollar in bilateral trade over the past several years. As recently as 2015, approximately 90 per cent of bilateral transactions were conducted in dollars. Following the outbreak of the US-China trade war and a concerted push by both Moscow and Beijing to move away from the dollar, however, the figure had dropped to 51 per cent by 2019.

Alexey Maslov, director of the Institute of Far Eastern Studies at the Russian Academy of Sciences, told the Nikkei Asian Review that the Russia-China “de-dollarisation” was approaching a “breakthrough moment” that could elevate their relationship to a de facto alliance.

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