🇨🇳 China’s Yuan Lending
The reported figure of $480 billion in Yuan lending appears to be a recent projection or a specific subset of China’s overall international finance, which is primarily driven by its Belt and Road Initiative (BRI).
- BRI Lending: China’s policy banks and state-owned enterprises have committed significant funds—over $1 trillion in total engagement between 2013 and 2023—to infrastructure projects across more than 150 countries.
- Yuan Internationalization: The $480 billion in Yuan lending likely refers to China’s efforts to promote the international use of its currency. China is actively encouraging BRI recipient countries to use the Yuan (Renminbi or RMB) for trade settlement and financing.
- Motivation: This strategy helps China reduce its exposure to U.S. financial influence (the “weaponization of the dollar”) and lower borrowing costs for its partners, especially as U.S. interest rates have been relatively high.
🇷🇺 Russia Drops USD Completely
Russia has been aggressively pursuing de-dollarization in its trade and reserves, a policy that accelerated sharply following Western sanctions related to the 2022 invasion of Ukraine.
- Bilateral Trade: Russia’s bilateral trade with key partners, especially China, has largely moved away from the U.S. dollar, often settling in their respective national currencies (Ruble and Yuan).
- National Welfare Fund (NWF) Reserves: In a key move in 2021, Russia’s Finance Minister announced that the country would completely divest its dollar holdings from its National Welfare Fund (a sovereign wealth fund). The NWF’s composition shifted to increase holdings in the Euro, Chinese Yuan, and Gold.
- Overall Reserves: Russia’s Central Bank has also steadily reduced the overall share of U.S. dollars in its international reserves over the years.
- Goal: The primary goal is to shield its economy from Western sanctions and reduce dependence on a financial system controlled by countries it considers adversaries. The freezing of a significant portion of Russia’s dollar assets in 2022 acted as a major catalyst for this push.
The reported actions from both countries are part of a broader global trend where nations are seeking alternatives to the U.S. dollar’s dominance for greater financial autonomy.
