In the unexpected winner of the economic war between Russia and the west has its own currency China, yuansince its international use has increased significantly since sanctions against Moscow. Of course, Russian imports from China played a decisive role, which increased significantly as Moscow hurried to squeeze out Western technologies mainly with technologies of Chinese origin, but also with many other goods that are no longer imported from Western countries.

Over the past year, the share of Russian imports paid in yuan has risen to 23% from 4% before the invasion of Ukraine. In addition, from March 2021 to March this year, the RMB’s share in the global international trade finance system, which supports 80% of international trade, has more than doubled. It is clear that after the sanctions imposed by the West against Moscow, Beijing stepped up its efforts to wean the Chinese economy from the dollar.

In fact, some economic analysts estimate that part of Beijing’s motivation is that China may be preparing for a possible armed conflict with Taiwan. China’s attempts to wean itself off the US currency have been going on for more than a decade. Beijing was required to avoid any risks that could arise in the US economy, such as contagion by the 2008 financial crisis. However, at the same time, the second economy in the world had ambitions to create its own sphere of economic influence.

In the wake of Western sanctions against Moscow, Beijing stepped up efforts to wean China’s economy off the dollar.

OUR war in Ukrainehowever, its aftermath accelerated these Beijing efforts, as Washington used the dollar and its sovereignty as a weapon to inflict financial damage on Moscow, and succeeded in cutting Russia off from international dollar transactions, thereby sharply limiting its ability to trade with other countries. As the related Guardian report eventually highlights, China is encouraging other countries to switch to Chinese currency in their international transactions. Argentina and Brazil recently signed an agreement with China and will henceforth pay for imports of Chinese goods in yuan instead of dollars.

After all, Bangladesh announced last month that it would repay a $318 million yuan loan it received from Russia to finance a nuclear power plant. However, this is a rare case when an international transaction is paid in yuan without the participation of China on either side of the transaction.

However, as the British newspaper points out, the Chinese economy is much more interconnected with the economy of the West than with the Russian economy. Thus, many economic analysts believe that, in practice, the West cannot strike at the Chinese economy without suffering corresponding blows at itself. Again, Beijing is trying to protect itself as much as possible, and part of that self-defense is to internationalize the yuan as much as possible.

So in March, a Chinese company paid in yuan for the purchase of 65,000 tons of liquefied natural gas French multinational Total Energy. After all, China has developed an interbank payment system as an alternative to the dollar-pegged international Swift system and has already developed its own e-CNY digital currency. All of these technological advances pale in comparison to the political and geopolitical factors that determine the international role of the yuan.

Its internationalization is, after all, a matter of prestige for Beijing, but suggests that China’s leadership will loosen its tight controls on capital flows and allow its currency to float more freely, allowing the market to determine its exchange rates.