Reliable focus on the yuan

Chinese expert: Switching to yuan settlements between Belarus and China will accelerate mutually beneficial co-operation

The internationalisation of the Chinese yuan continues to gain momentum. The monetary unit of the Greater China is increasingly used both in Eurasia and around the world, reducing dependence on the dollar. Russia is a vivid example of this, where they have already focused on the transfer of settlements on foreign trade operations with the countries of Asia, Latin America and Africa into the Chinese currency. Belarus, as a future member of the Shanghai Co-operation Organisation, is also increasingly abandoning the dollar in favour of the yuan, implementing a major China-Belarus Great Stone project, thereby opening up new prospects for co-operation with China in industry, information technology, medicine and other key economic sectors. The Professor, Deputy General Director of Great Stone Industrial Park Development Company, Doctor of Economics Ren Fei spoke about the benefits this will bring to our country.

It is beneficial to refuse intermediaries

Speaking about the co-operation between Belarus and China, Professor Ren Fei recalled that the first loan agreements for the implementation of a number of infrastructure projects in our country were made in dollars.
— It cost more than if we paid in yuan. Therefore, in 2009, a three-year currency swap agreement worth 20 billion yuan (about $3 billion) was signed between the People’s Bank of China and the National Bank to encourage trade and investment between the two countries. Thanks to this, Belarusian enterprises could directly make purchases for this money in China. 
The Professor said that after trying to work in this format, the parties realised how convenient it is. This, in turn, became a prerequisite for making settlements in yuan at the ‘Great Stone’ industrial park in a few years.
— Gaining momentum, the Belarusian-Chinese co-operation has made it possible to create an exemplary Silk Road project ‘Great Stone’. It has been chosen as the main platform for promoting cross-border payments in yuan in the Eurasian Economic Union. In 2020, this initiative was widely discussed in the industrial park. We also invited representatives of the People’s Bank of China and discussed the topic of expanding the use of the Chinese yuan in the park itself.
The Fast enterprise was the first company of ‘Great Stone’, which used the yuan in settlement with China. The company bought Chinese equipment and received investments in yuan. 
— This was the first successful example. After that, we recommended that our residents also open an account in Belarusian banks in yuan. We wanted to expand this activity. Now the number of residents who make payments in yuan is growing.
The Professor emphasised that Western sanctions and restrictions against Belarus and Russia only increased the use of the yuan.
— The fact is that it has become much more difficult to conduct investments and transactions with China because so much was tied to working with the SWIFT international interbank payment system. In this regard, we are now actively working on the issue of using a similar Chinese CIPS system.
Professor Ren Fei noted that despite the logic of this decision, there are some problems with the transition to the Chinese payment system in Belarus.
— Banks here are very used to SWIFT, so CIPS is moving more slowly than we would like. Although, SWIFT brings extra costs in terms of making payments with China. Today, those financial institutions that have suffered the most from the sanctions are most actively working with the Chinese system. But I think that over time CIPS will be looked at better. There are banks in Belarus that are already working very well with the Chinese system.
The professor also believes that if the West increases its pressure, it will push the financial organisations of Belarus and Russia to a greater extent to work with CIPS. He noted that in Russia these processes are now moving faster.

Until 2030, the yuan will exceed dollars and euros in settlements in the current geopolitical conditions on the territory of Eurasia.

The West only brings the East closer

The Professor Ren Fei is convinced that now the settlements in yuan between countries will only increase. He explained that the day before, Russia supported the transition to the yuan in foreign trade settlements with the countries of Asia, Latin America and Africa. This was stated by Russian President Vladimir Putin during Russian-Chinese talks with Chinese President Xi Jinping.    — It is worth noting that now the share of the yuan in Russia’s export settlements is about 16 percent. Therefore, it is safe to say that the yuan is becoming an international settlement currency. Russia has taken a serious step towards this. From my point of view, the use of the yuan in Belarus and moving away from the dollar and the euro will also be beneficial. If we evaluate the situation at the moment, then a large part of the Belarusian economy is tied to the dollar. In the context of political complications, this becomes problematic. In turn, China treats its partners with great respect and will not engage in political blackmail or pressure. 
The Professor separately noted that one should not forget about the banking crisis that is now taking place in the United States. This crisis in the future will affect not only the United States, but also the European economy. He emphasised that in America they turn on the printing press more often and create unsecured dollars, spurring global inflation. It brings harm to the whole world.   
— China, for example, is trying to move away from an empty and unsecured dollar. In January 2023, China cut its holdings in US government debt for the sixth consecutive month, mainly due to the Fed’s interest rate hike and the long-term diversification of China’s foreign exchange reserves, which has now become more deposit-safe. The statistics confirm this. China’s holdings in US Treasuries fell to $859.4 billion from $867.1 billion in December 2022, according to released data from the US Treasury Department. Thus, Chinese investments in the US national debt are at the lowest level since May 2010.

China is an important driver of modernisation and the arrival of new technologies for Belarus. Switching to yuan will only improve this process.

True perspective

  The professor drew attention to the fact that Belarus continues to actively co-operate with China in many financial areas. This is how the Belarusian side receives Chinese technical and economic assistance, investments, and uses Chinese loans. 
  — Therefore, the calculation in the Chinese CIPS system will be more profitable and less risky or large industrial projects.China is an important driver of modernisation and the arrival of new technologies for Belarus. Switching to yuan will only improve this process. We get rid of obvious risks and speed up the process of agreeing and receiving funds without intermediaries in the form of US banks. This would allow attracting larger Chinese projects to work in Belarus. Many companies will come more boldly when the conditions for more convenient settlements are created for them, among other things.  The expert separately noted the fact that the number and amounts of settlements in yuan between the SCO partners are also growing significantly. 
“SCO member states are now making settlements with China in yuan. This expands the possibilities for barrier-free co-operation. When Belarus joins this organisation, it will receive additional opportunities for the development of its economy through the use of the yuan. Until 2030, the yuan will exceed dollars and euros in calculations in the current geopolitical conditions on the territory of Eurasia. For example, Kazakhstan also buys a lot of goods from China, and China buys oil there for yuan. The West will only push for this,” Professor Ren Fei summed up.

By Ilya Kryzhevich

Photos by BELTA, Yelizaveta Kobetskaya, Aleksey Matyush, Vitaly Pivovarchik