Chinese banks seize on Russia, oil trade to internationalize yuan

Chinese banks seize on Russia, oil trade to internationalize yuan

Chinese banks are ramping up efforts to promote international use of the yuan, and reporting a surge in cross-border yuan business from the country’s booming trade with Russia and deepening ties with the Middle East.

Harbin Bank Co, in China’s Heilongjiang province neighboring Russia, saw its cross-border yuan business grow nine-fold last year to a record, as the Sino-Russia trade grew briskly after the Ukraine war began.

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China Construction Bank and Agricultural Bank of China (AgBank) reported total assets at their Moscow subsidiaries jumped 3.3 times and 1.4 times, respectively, in 2022, while Russia was put under harsh western sanctions.

Admittedly the growth came off a low base, but these small steps in yuan adoption come after a string of bilateral deals by China with its trade partners, such as its oil purchases from the Gulf and other trade with Brazil and Russia.

The yuan’s share of global payments is merely 2.5 percent, and tiny compared with US dollar’s 39.4 percent and euro’s 35.8 percent, according to SWIFT, the global payment messaging system controlled by the West.

But Reuters analysis of banks’ latest filings shows how the one-year-old Ukraine war that