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Russia Evades Sanctions Using the Chinese Yuan

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Russia, faced with sanctions from Western countries because of its actions against Ukraine, is now more than ever relying on China, using Chinese money, the yuan, to conduct its business. This growing relationship between Russia and China shows their mutual goal to reduce the power of Western countries in global affairs.

Since the conflict with Ukraine, Western countries have imposed sanctions on Russia, making it hard for them to do business using Western currencies like the dollar and the euro. In response, Russia has turned to China. A study from the European Bank for Reconstruction and Development (EBRD) highlights that by the end of 2022, 20% of Russia’s imports were invoiced in yuan, up from 3% a year earlier.

Beata Javorcik, the EBRD’s chief economist, said, “Yuan is being used as a vehicle currency,” highlighting that Russia is becoming a significant player in offshore yuan transactions. This implies that Russia is becoming clever in finding ways around the sanctions by also trading through middlemen countries and avoiding the use of Western insurance for its oil exports.

But the EBRD warns that if Russia continues to use the yuan due to the sanctions, it might lead to lesser dependence on the US dollar globally, potentially changing how international trade is conducted. They wrote, “This, in turn, might lead to a greater fragmentation of global payment systems.”

The fact that Russia is drawing closer to China is not just about economics or avoiding sanctions; it’s about global power. It’s Russia and China telling the world they can work together to change the balance of power in international relations.

This strengthening bond between Russia and China is a signal to the Western world about changing alliances. It’s not just about money; it’s about changing the rules of the game in international politics. As Russia and China continue to collaborate, it might change how countries relate to each other and could redefine the world’s political landscape in the years to come.

This emerging partnership tells a story of shifting power and alliances. It’s a wake-up call for Western countries to reconsider their stands in global politics and to be watchful of the unfolding realignment that can reshape the future of international relations.

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