Trade settlement in local currencies between China and Russia, according to “official” statistics, account for 7% of their bilateral trade. But the dollar amount has grown 700% in the last year.
Growing cooperation between Russia and China has become one of the hottest topics in the global economy. It is signaling the emergence of a strong alliance of one the world’s richest and strongest economies, which is expected to reshape the existing western-dominated economic model (RT.com link)
This part of an ongoing, systematic plan to remove the dollar as the global reserve currency. China, as we all know, has been methodically establishing currency swap facilities with most of its major trading partners which enable a limited amount of bilateral trade settlement in local currencies. These deals have been signed with many western countries, including the UK, France and Switzerland.
“There is a reason to believe that this trend will continue in the coming years and the role of the yuan will increase rapidly not only in international trade, but as the currency of international reserves of the central banks,” he said [Aleksandr Prosviryakov, PricewaterhouseCoopers LLC, Russia].
The writing is on the wall for the dollar. It’s only a matter of time before the plug is pulled. It has been my view that China has been working toward de-dollarizing the global financial system in an attempt to avoid a massive global economic shock and the ensuing chaos, which would likely precede a global military conflict.
Certainly the massive transfer of physical gold from the west to east has been part of the process in ending the petro-dollar.
I hope China’s plan to precipitate a peaceful transition from a dollar reserve currency system to a new currency system is successful. I find it hard to believe that the U.S. will relinquish its power without a big fight…