The country used its own currency - the yuan - for almost the entire amount of Russian oil purchased last year, Reuters reported on Thursday, citing several trade leaders with direct knowledge of the matter.
“All offshore Russian oil sales to China have been settled in renminbi since the price cap, crowding out the last small number of banks that handled US dollars,” one executive told Reuters, referring to the yuan by its official name.
The leader was likely referring to the fact that Russian crude oil is subject to the $60 per barrel price ceiling imposed by the G7-led coalition. The cap makes it extremely difficult for banks to process greenback payments, the source told Reuters.
Although Reuters did not specify how much of Russia's imports China pays in yuan, total settlements on the Cross-Border Interbank Payment System (China's version of SWIFT) jumped 22% year-on-year to $14 trillion in 2022 Reuters reported, citing data from the Chinese central bank.
And much of that trade has been conducted in yuan amid sanctions and boycotts against Moscow -- which include excluding some Russian banks from the dollar-dominated SWIFT payments system, making transactions more difficult.To put this into context, China imported $88 billion worth of major commodities from Russia in 2022, including crude oil and heating oil, a 52% increase in value from 2021.
Both China and Russia have been trying to reduce their dependence on the dollar for years. Systems have even been created to replace SWIFT.
But their introduction started to accelerate only after the outbreak of the war in Ukraine.
According to Reuters calculations based on official Chinese data, in March 2023 the yuan overtook the dollar as the most commonly used currency for cross-border transactions in China.
Russia's payment system, the SPFS, has also expanded rapidly since the war, the country's central bank said in September 2022, according to Reuters.
The sanctions, which underline the dollar's power, have also prompted other countries such as Brazil and France to call for less reliance on the dollar, accelerating the debate on de-dollarization.
