pakistan, china ditch us dollar for yuan in bilateral trade
Wednesday, November 07, 2018
CPEC & OBOR
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The world's second-largest economy, China has been largely dominating in its economic relations with Islamabad, with Chinese exports making up 87 percent of the trade
Pakistan and China have agreed to walk away from the US dollar in bilateral relations and do trade in yuan, Islamabad announced on Tuesday.
"China and Pakistan agreed to start trading in the yuan instead of the dollar," Information Minister Fawad Chaudry told the media in Islamabad, as quoted by the Turkish Anadolu Agency.
According to Chaudry, the agreement will help Islamabad save up its US-dollar-denominated assets, given the massive 87-percent trade deficit with China (The Financial Daily estimates it to be $12.66 billion).
Ditching the American currency would also mean Islamabad and China using yuan in transactions within the China-Pakistan Economic Corridor, a $60 billion-worth infrastructure project funded by China that aims to boost the region's integrity by connecting the Pakistani port city of Gwadar and the Xinjiang Uyghur Autonomous Region via a network of transportation routes.
The greenback has long dominated the global financial system, but it has received a series of blows here and there in recent times, with China probably making the strongest case. Earlier this year, the world's biggest oil buyer started offering yuan-backed crude futures.
India has been pushing for paying for Russia's energy and defence equipment in rupee, while Venezuela voiced plans to inject over 2 billion worth of dollars in euros or yuan into its economy in response to Washington's sanctions against Maduro's policies.