Russia, China pledge bigger role for yuan, ruble

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Russian Prime Minister Vladimir Putin shakes hands with his Chinese counterpart Wen Jiabao

SAINT PETERSBURG (AFP) — Prime Minister Vladimir Putin said on Tuesday the Chinese yuan would soon start trading in Russia as the countries seek to challenge the dollar and promote the use of national currencies.

“We agreed to expand the possibilities for application of national currencies during trade and economic contacts,” Putin said after talks with Chinese Premier Wen Jiabao in the former Imperial capital Saint Petersburg.

“Now the ruble started trading on the exchange in China and the yuan trade will begin in Moscow in early December,” Putin said, hailing the move as a “serious step” on the path to strengthening economic ties.

On Monday, China conducted the first yuan trade with the Russian ruble in order “to promote the bilateral trade between China and Russia” and to reduce the conversion cost among other tasks, said a statement posted on the website of the China Foreign Exchange Trade System.

Both China and Russia, which both seek to promote their national currencies worldwide, have called for a revamp of the global financial system in the wake of the global economic crisis, saying there is a need for a new supra-national currency besides the dollar.

Total trade between Russia and China is estimated to top 50 billion dollars at the end of the year, the Russian government said. Much of that trade is currently handled with US dollars rather than Chinese yuan or Russian rubles.

Putin spoke after two days of talks with Wen, who is in the country to promote energy cooperation with Russia.

The two leaders oversaw the signing of a raft of agreements, including a contract to build two additional reactors in China’s Tianwan nuclear power plant.

Russia’s first 1,000-megawatt nuclear reactor at Tianwan in eastern China went into operation in June 2007 after numerous delays, while a second went into operation in September of the same year.

The two men were also widely expected to tackle pricing differences in gas cooperation.

Russia’s gas giant Gazprom signed a framework agreement with the China National Petroleum Company (CNPC) last year on shipments of natural gas to China.

The deal could eventually see 70 billion cubic metres of Russian natural gas sent to China each year but talks have been mired in pricing differences.

Chinese officials said the differences between the two sides was now 100 dollars for 1,000 cubic metres, expressing hope last week that they could be resolved during Wen’s visit to Russia.

Putin said the talks were progressing “successfully” but did not elaborate. In other agreements, Russia’s biggest lender Sberbank and Export-Import Bank of China agreed to open a 2-billion-dollar credit line to finance joint projects, the Russian premier said.

Putin and Wen were meeting on the heels of President Dmitry Medvedev’s three-day visit to China in September during which he and President Hu Jintao launched a cross-border pipeline linking the world’s biggest energy producer with the largest energy consumer.

According to the Kremlin, the oil Russia will send to its neighbour from next year over the next 20 years could be worth 150 billion dollars.

By Marina Koreneva
Nov. 23, 2010

Source: AFP

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