China and Russia Dump US Dollar For Bilateral Trade

Today Russia and China announced that they will no longer use the US dollar for bilateral trade and instead use their own currency, their leaders said.

In a joint conference in St. Petersburg, Russia between Prime Minister Vladamir Putin and Premier Wen Jiabao, Mr. Putin said:

"About trade settlement, we have decided to use our own currencies"

This week, China's currency exchange added the Russian ruble to the list of currencies that can be traded against the Chinese Yuan. This suggest that future settlements in oil trade will no longer be done using the US dollar.

Russia and China continue to aggressively pursue trade agreements and cooperate on economic and global issues. Bilateral trade between the two countries expanded by over 40% this year and are likely to gain momentume as both countries continue to work together in the fields of electricity, technology, natural gas, oil, and nuclear energy. This week's visit by Premier Wen Jiabao solidified their strong unity into helping one another pursue continued mutual economic growth. Both leaders publicly agreed that the Sino-Russian relationship has reached the best period in history.

An example of this strong relationship is the near completion of a 1000 km oil pipeline from Siberia to the northeast area of China. This cooperative effort is to send 300 million barrels/day of Russian oil to China for the next 2 decades in return for a $25 billion dollar loan. This will make China as Russia's largest oil importer displacing Germany, Netherlands and Poland. In 2009, China was the 4th largest importer from Russia according to the US Energy Information Administration. Presently, Russian crude is delivered to China via railway and a small pipeline in Kazakhstan.

As China continues its tremendous appetite for oil and natural energy, it is choosing very carefully who they invest and do business with. China imports oil primarily from Saudi Arabia, Angola, and Iran. This year China has decided to move away it's Iranian dependence having reduced imports by as much as 25% according to Thomas Strouse, a Washington based oil consulting firm.

About Kerry Kobashi

Kerry is the founder of KerryOnWorld. He lives in Silicon Valley and has worked as an engineer and project manager. He owns Kobashi Computing a consulting company.