Economic relations between Russia and China are growing stronger, affecting Russia's dependency on the Chinese currency. This new direction is due to Russia's exclusion from global financial systems and presents new opportunities for China.
Russia's Economic Dependence on the Yuan
With the intensification of international sanctions against Russia, the yuan has become the most traded foreign currency in the country. Russia's exclusion from Western financial systems, such as SWIFT, makes it increasingly dependent on the yuan. Based on lending and banking transfers, Russian economic stability depends on the stability of yuan flow. Such a situation could be dangerous for the Russian economy in the event of a sudden cessation of its flow.
Geopolitical Risks for China
For China, the strategic task is to balance supporting Russia within the BRICS alliance while maintaining ties with other economic states, particularly in Europe and North America. Openly supporting Russia may lead to sanctions against China, threatening its access to international markets. The use of the yuan in Russia is not yet sufficient to make it a dominant international currency, and China must be cautious not to lose Western markets.
Conclusion and Outlook
The current situation creates both economic and geopolitical risks for both countries. China, strengthening ties with Russia through the BRICS group, must balance its interests to avoid risking relationships with other international partners. In the long term, this may accelerate China's efforts to strengthen the yuan internationally, but this path is strewn with obstacles amid the continued dominance of the dollar.
Existing trends in economic relations between Russia and China pose multiple risky situations. While China seeks to strengthen its global position, this aspiration may bring about significant challenges. Russia, in turn, must focus on diversifying its economic partners to minimize potential risks.