According to the website of The Washington Post on May 16th, a series of recent actions to settle in Chinese yuan are indeed moving towards China's vision. This vision is to lead a global economic order that is not affected by fluctuations in the US dollar and Western sanctions. Newsan Home Appliances is one of the largest home appliance retailers in Argentina, with most of its products imported from China. Previously, it mainly used the US dollar as an international trade settlement currency to purchase refrigerators, televisions, and components. But last month, the company began a new attempt: settling transactions in Chinese yuan. This is part of an effort aimed at easing pressure on the Argentine economy, which lacks the US dollar. The CEO of the company, Luis Galli, said, "The Chinese yuan is becoming increasingly important as an international trade settlement currency." The report stated that as the Argentine economy once again falls into crisis and the supply of US dollars continues to decrease, the Argentine government announced in April that it will use the yuan to pay for approximately $1 billion worth of goods imported from China, as well as to pay for approximately $790 million worth of goods imported from China every month thereafter. In addition, Argentina has expanded its currency swap agreement to allow it to borrow Chinese yuan from its second largest trading partner, China. The report states that this is good news for Beijing. For a long time, Beijing has hoped for the wider use of the Chinese yuan and to gain some of the prestige that the United States previously enjoyed with the global dominance of the US dollar. However, until recently, luck in this area was not very good. The report states that suddenly, more customers are willing to settle in Chinese yuan, partly due to internal economic crises in various countries, Western sanctions on Russia, China's position as a major lending country, and growing concerns about being constrained by Washington policies. In Buenos Aires, importers accepted this change. Customs broker Ruben Guidoni said, 'Nowadays, everyone is competing to purchase imported goods in Chinese yuan. Orders settled in Chinese yuan quickly received approval from relevant departments in Argentina.'. Alejandra Kononi, the head of the Argentina China Chamber of Commerce for Production, Industry, and Trade, stated that more than half of the computer, textile, mobile phone, and motorcycle parts imported by Argentine companies from China are now paid in Chinese yuan. The report also stated that recently, Brazilian authorities announced that companies can settle trade in Chinese yuan; A French company has accepted payment for 65000 tons of liquefied natural gas in Chinese yuan; The Chinese yuan has become the currency with the highest monthly trading volume on the Moscow Stock Exchange. Economists both inside and outside of China believe that these do not mean that the renminbi will soon replace the US dollar. Replacing the US dollar will require more countries to settle large amounts of trade that does not involve China in renminbi. The widespread use of the US dollar makes it difficult to replace, but the recent series of actions to settle in Chinese yuan is indeed moving towards China's vision. This vision is to lead a global economic order that is not affected by fluctuations in the US dollar and Western sanctions. Against the backdrop of deteriorating tensions between Moscow and Washington, this effort has become increasingly urgent. The report suggests that even a slight increase in the international circulation of the Chinese yuan supports the view that China's currency can not only serve as a defense against Western sanctions, but also as a defense against fluctuations in the US dollar. After the Western sanctions against Russia, countries with strong trade relations with Russia, such as Brazil, began to view their dependence on the US dollar with caution. Last month, Brazilian President Lula called for more large developing economies to abandon the US dollar. Since the West turned the widespread use of the US dollar into a weapon and imposed an unprecedented series of sanctions on Russian entities, this view has begun to gain more support. Arthur Kroeber, the research director of the consulting firm Longzhou Jingxun, said, "Obviously, not only China and Russia, but also many other countries have shown more interest in finding alternatives to the US dollar payment system, because everyone has seen how the United States has weaponized the US dollar; If there is any infringement, please inform us and we will handle it promptly.
More international trade settled in RMB
2023 05/25