China and Russia are strengthening their economic ties through increased monetary cooperation, a move that is significantly boosting trade between the two nations. By settling more transactions in their local currencies—the Chinese renminbi (RMB) and the Russian ruble—they are reducing reliance on third-party currencies and enhancing financial stability.
In recent years, RMB has become one of Russia’s main foreign exchange reserve currencies. As of 2024, over 95% of China-Russia trade transactions are settled in RMB and rubles. This shift not only cuts transaction costs and minimizes exchange rate risks but also supports the internationalization of the RMB and Russia’s strategy to reduce dependence on the U.S. dollar.
“Using local currencies in trade helps us avoid potential risks from fluctuations in major global currencies,” said a financial analyst familiar with the matter. “It also strengthens our monetary sovereignty.”
China and Russia are also improving their financial infrastructure by aligning China’s Cross-border Interbank Payment System with Russia’s System for Transfer of Financial Messages. This alignment ensures smoother settlements and encourages bilateral investment and bond issuance.
The cooperation comes as Russia faces economic sanctions from Western countries, pushing it to find alternatives to the U.S. dollar and euro for international settlements. For China, promoting the RMB internationally adds to its economic influence and provides more options in global trade.
However, challenges remain. China’s capital and financial accounts are not fully liberalized, which could lead to RMB shortages. Limited internationalization of the ruble and secondary sanctions from the West also pose risks. Addressing these issues will be crucial for the future of China-Russia monetary cooperation.
