It’s A ‘Movement’: Russia And China Lead The Way Against US Dollar Domination
Faced with new sanctions, Russia and China are presenting a united front to distance themselves from the U.S.-dominated international financial system — and are using their influence to encourage other countries to do so.
The Chinese government plans to block a U.S. Navy ship from making a scheduled stop in Hong Kong over military sanctions imposed by Washington, CNN reported. The move follows U.S. sanctions on the Chinese military over their purchases of Russian weapons.
On Thursday, 33 more Russians were blacklisted for alleged involvement in interfering with the 2016 U.S. presidential election, bringing the total number being punished to 72.
Domestic U.S. politics are creating problems for Russia and other countries around the world, Russian Foreign Minister Sergey Lavrov said Friday during a press conference in Bosnia and Herzegovina, Newsweek reported.
“Russia will do everything necessary to not depend on the U.S. and its Western allies that have joined in on sanctions, Lavrov said. ‘More and more of our partners in Asia and Latin America are beginning to come from the same approaches. I think that this movement will only grow stronger.'”
Lavrov targeted the credibility of “the current International Monetary Fund.” He said its principles have been undermined, the dollar system has discredited itself and confidence in it is falling in the face of what he described as “unscrupulous competition” by the U.S.
China sees U.S.-imposed sanctions as an “unreasonable action,” said Chinese Foreign Ministry spokesperson Geng Shuang. President Donald Trump triggered a multinational trade war by implementing steel and aluminum tariffs against China earlier this year.
Russia joined China in filing suits with the World Trade Organization, and they’re bolstering relations by expanding trade and holding historic military exercises, Newsweek reported.
Chinese President Xi Jinping and President Vladimir Putin met last week at the Eastern Economic Forum in Vladivostok, where they were photographed drinking a toast at a table piled with caviar. Putin wants to use national currencies more in bilateral deals.
U.S. allies France, Germany and the U.K., who signed the 2015 Iran nuclear deal, have also been scrambling after Trump abandoned the deal in May and began reimposing sanctions against Iran and countries doing business with it.
German Foreign Minister Heiko Maas appealed to European leaders in August, saying it was “essential that we strengthen European autonomy by setting up payment channels independent of the U.S.A.,” according to an op-ed for Germany’s Handelsblatt newspaper.
Efforts to reduce the dollar’s dominance won’t work anytime soon, wrote Wolf Richter, CEO and editor-in-chief at Wolf Street, in July. Despite China being the second largest economy in the world, central banks are still cautious of the yuan, he said. There just isn’t a great alternative to the dollar right now.
“Watching grass grow is breathtakingly exciting compared to watching the RMB gain status as a reserve currency,” Richter wrote.