Ukraine, Taiwan on the leaders’ agenda . . .
Chinese President Xi Jinping and Russian President Vladimir Putin will meet in Uzbekistan on September 15 on the sidelines of a summit of the Shanghai Cooperation Organisation (SCO), a grouping that brings together leaders from China, India, Kazakhstan, Kyrgyzstan, Pakistan, Tajikistan, Russia, and Uzbekistan to discuss regional issues. The meeting’s agenda includes security in Afghanistan, the admission of Iran as a new member, strengthening economic collaboration, and closer technological and industrial co-operation. Presidents Xi and Putin are expected to discuss the Ukraine conflict and growing tensions over Taiwan.
For Russia, Chinese Yuan to displace USD . . .
Xi and Putin may use the SCO summit to discuss strengthening economic and financial ties, which have been a lifeline for Russia in the face of Western sanctions. Major Russian companies are increasingly settling trade and denominating their debt in the yuan, China’s currency. In the past two weeks, Russian majority state-owned energy multinational Gazprom signed an agreement with the China National Petroleum Corporation to make payments in yuan and rubles, while Rosneft, another major Russian energy company, announced a public offering of its bonds in yuan. This shift leads to the yuan’s growing prominence in the Russian economy. The proportion of yuan in Russian foreign exchange increased to 26 per cent in August, up by 20 per cent since April 2022.
Moving away from Western financial infrastructure . . .
Closer China-Russia economic relations and the move to internationalize the yuan have been developing slowly over the past decade but have been expedited since the start of Russia’s war with Ukraine. The move to the yuan to settle trade and other financial transactions will provide Russia with an alternative to the U.S. dollar, lessening the impact of Western sanctions on the Russian economy. At the same time, the move will help with the internationalization of the yuan, which is expanding its global reach. Russia is currently the third-largest market for yuan outside mainland China, following Hong Kong and the United Kingdom.