China advances in abandoning the US dollar for settlements: signs an agreement with Brazil and completes the first LNG purchase in yuan Cryptocurrencies and ICOs

China has been making progress on its goal of positioning the yuan as an alternative to the US dollar for settling international payments. The Chinese government recently reached a bilateral agreement with Brazil to settle transactions using their national currencies and completed a liquefied natural gas (LNG) purchase with a French company using yuan as payment.

China advances de-dollarization efforts with Brazil and France

China is positioning its fiat currency, the yuan, as an alternative to the US dollar for international deals. The Chinese government recently achieved two milestones in this regard, inked a bilateral agreement with Brazil that will allow the two countries to settle payments with their national currencies, and completing the first LNG (liquefied natural gas) import trade was settled in yuan.

The Brazil-China agreement allows the two countries to exchange goods using the Chinese yuan and the Brazilian real. The expectation is that this agreement will facilitate transactions between the two countries, reducing costs and promoting even greater bilateral trade, and facilitating investment, according to the Brazilian Agency for the Promotion of Exports and Investments.

The bilateral trade figures of China and Brazil reached the $150 billion mark in 2022, with China being Brazil’s largest partner.

In the case of LNG imports, the negotiation was managed between the China National Offshore Oil Corporation (CNOOC) and the French Totalenergie, involving the purchase of 65,000 tons of commodities. The transaction was carried out on the Shanghai Oil and Natural Gas Exchange, which served to sell the LNG of Arab origin.

The Chinese oil company commented that it is committed to innovation when it comes to pricing and deals. CNOOC Deputy General Manager Yu Jin stated:

The promotion of international resource acquisition based on the yuan settlement can promote the globalization of energy trade and build a more diversified ecology.

Chinese CBDC said to be key to yuan usage growth

While the Chinese government has recently made significant progress promoting the yuan as a replacement for the dollar for some deals, with Russia pledging to use the currency to settle payments with emerging economies and other countries, analysts believe its full adoption requires implementation. of a new series of policies.

Professor Ju Jiandong, an expert on US-China trade disputes, proposed a progressive tax on cross-border capital flows to protect the country from external risks. In this, Jiandong explained:

Such a policy design would be like installing a firewall and thus solving the dilemma of capital account liberalization and yuan convertibility.

While the use of the Chinese yuan for global payments remains relatively low, with only 2.19% of total global payments settled in the currency, Jiandong believes that the introduction of the yuan central bank digital currency (CBDC) could give it an edge compared to other currencies. He stated:

If China can innovate the whole system through digital currency and establish a digital international currency system, it may have a chance to strengthen the use of the yuan abroad.

What do you think about the rise of the yuan as an international settlement currency?

Sergio Goschenko

Sergio is a cryptocurrency journalist based in Venezuela. He describes himself as someone who was late to the game, entering the cryptosphere when the price spike occurred in December 2017. With a background in computer engineering, living in Venezuela and being impacted by the rise of cryptocurrencies on a societal level, offers a different point of view. about the success of cryptocurrencies and how he helps the unbanked and underserved.

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