Russian officials want China’s help in developing an international payment system that would allow Moscow and Beijing to undermine the global primacy of the U.S. dollar.
“Such work makes it possible to prevent risks and promote the transition of the ruble and yuan into the status of world reserve currencies,” Russian Deputy Prime Minister Alexander Novak said Tuesday, per state media.
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Chinese General Secretary Xi Jinping and Russian President Vladimir Putin have aligned in their mutual ambition to degrade Western power. China’s apparent refusal to arm Russia against Ukraine has pointed to the limits of that cooperation, but a push to create a new system for banks to conduct transactions would appear to respond to the U.S. and European move to expel several Russian banks from the SWIFT system that allows financial institutions to communicate.
“In this regard, the Central Bank of Russia and the Bank of China are working on the possibility of opening accounts for Russian companies in China, Chinese companies in Russia, and creating a payment system without using SWIFT,” Novak said.
Dozens of foreign financial institutions joined Moscow’s alternative payment system this year, a Russian Central Bank said in September, but the number is still dwarfed by the thousands of entities that rely on SWIFT. Western powers use economic measures to punish Russia’s invasion of Ukraine and the United States leads an international charge to drive Chinese telecommunications companies out of Western networks.
“The U.S. needs to mend its ways, stop politicizing and weaponizing economic, trade, and sci-tech issues, and provide a fair, just and non-discriminatory business environment for foreign companies including those from China,” Chinese Foreign Ministry spokesman Zhao Lijian said Monday in response to the Federal Communications Commission’s decision to ban the import of Huawei and ZTE devices into the United States. “China will continue to firmly defend the legitimate and lawful rights and interests of our companies.”
China has wielded economic clubs of its own. Xi blackballed Australia’s wine industry, for instance, in retaliation for Australia’s demand for an international investigation of the origins of the coronavirus pandemic, a controversy that spiraled to the tune of $20 billion worth of economic sanctions, according to Australian officials.
While Putin and Xi resent the U.S. capacity to impose sanctions around the world, the international desire for access to Western markets makes it difficult to blunt the efficacy of the sanctions, even when a central government does not join the U.S. in imposing the restrictions. India, for instance, has not joined the Western policy, but it remains unclear whether Indian companies will provide Russia with goods they cannot find in Western markets.
“There is a hesitancy among exporters … particularly on sanctioned items,” Federation of Indian Export Organizations director general Ajay Sahai told Reuters, which reported that Russia has presented Indian officials with a 500-item shopping list.
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Novak, the Russian deputy prime minister, hopes that China will be a more daring partner, at least in the energy sector.
“Today, China is one of the key manufacturers of equipment in the oil and gas sector,” the Russian official said. “There is already close cooperation on supply of oil and gas equipment for projects in Russia.”
