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- China imported $88 billion worth of major commodities from Russia in 2022 — a 52% jump from 2021.
- Much of the trade was done in the Chinese yuan, per Reuters.
- China has ramped up the use of the yuan to buy commodities such as oil and coal from Russia.
China's not mucking about when it comes to de-dollarization.
The country has been using its own currency — the yuan — for almost all of the Russian oil it bought over the past year, Reuters reported on Thursday, citing multiple trading executives with direct knowledge of the matter.
"All seaborne Russian oil sales to China are now settled in renminbi since the price cap, sidelining the last small number of banks that were handling US dollars," one executive told Reuters, referring to the yuan by it's official name.
The executive was likely referring to Russian crude being subject to a $60-a-barrel price cap imposed by a G7-led coalition. The cap makes it extremely complicated for banks to process payments in the greenback, the source told Reuters.
While Reuters did not specify the proportion of Russian imports that China is paying for in the yuan, the total settlements on the Cross-Border Interbank Payment System — China's version of the inter-bank messaging system SWIFT — jumped 22% year-on-year to the equivalent of $14 trillion in 2022, Reuters reported citing Chinese central bank data.
To contextualize this, China imported $88 billion worth of major commodities including crude oil and fuel oil from Russia in 2022 — up 52% in value from 2021.
And much of this trade has been settled using the yuan amid sanctions and boycotts against Moscow — which include some Russian banks being locked out of the dollar-dominated SWIFT payments system, making transactions difficult.
China and Russia have been moving away from the dollar for years.
Both China and Russia have been trying to reduce their reliance on the dollar for years. They even put in place systems that act as a replacement for SWIFT.
But their adoption started to gain pace only after the Ukraine war started.
In March 2023, the yuan surpassed the dollar as the most used currency for Chinese cross-border transactions, per a Reuters calculation of official Chinese data.
Russia's payments system, the SPFS, has also expanded quickly since the war, the country's central bank said, per Reuters in September 2022.
The sanctions — which underscore the power the greenback wields — have also spurred other countries like Brazil and France to call for reduced reliance on the dollar, hastening a debate on de-dollarization.
But to be sure, the dollar's dominance isn't fading anytime soon — because its position as the incumbent currency of choice is just too strong, Insider's Jennifer Sor reported on May 6.
"If you're transacting something to millions or billions just as an organization, or if you're looking to park your cash somewhere and want to it to be as resilient as possible, you're probably going to choose the US dollar because it's the least volatile of the currencies. That's that," Bob Stark, the head of market strategy at fintech firm Kyriba, told Insider's Sor.