RIA Novosti reports that Russian Prime Minister Vladimir Putin proposed on Tuesday that Russia and China gradually switch over to national currency payments in bilateral trade, expected to total $50 billion in 2008.
“We should consider improving the payment system for bilateral trade, including by gradually adopting a broader use of national currencies,” Putin told a bilateral economic forum.
He admitted the task would be tough, but said it was necessary amid the current problems with the dollar-based global economy.
Chinese Prime Minister Wen Jiabao described strengthening bilateral relations as “strategic.”
“Mutual investment by Russia and China has already exceeded $2 billion, this is a very good index,” Jiabao said.
He praised the success of numerous projects, including additional construction of China’s Tianwan nuclear power plant and the opening of a joint pharmaceuticals center in Moscow.
A number of large Russian companies, including state-run oil producer Rosneft and aluminum champion RusAl, are seeking to develop investment projects in China, Jiabao said.
The Chinese premier said bilateral cooperation in the helicopter industry, mechanical engineering, the energy sector, timber production and innovation sector was also showing signs of progress.
“China is a staunch supporter of Russia’s accession to the WTO, but is categorically against politicizing the issue,” Jiabao said.
The Russian premier invited Chinese investors to join Russian timber projects.
“We welcome both domestic and foreign investment in Russia’s timber sector,” Putin said. “As one of the largest consumers of our products, China could be a source of such investment.”
He also offered Beijing Russia’s assistance in developing a large passenger plane on the basis of Russia’s experience with its wide-bodied Il-96 aircraft.
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Regards
Anyway, I also read in RIAN yesterday that the Chinese aren’t very enthusiastic about this proposal:
“Prime Minister Vladimir Putin has called on his Chinese counterpart, Wen Jiabao, to consider broader use of national currencies in mutual trade, and again criticized the U.S. dollar.
Although Russia and China have blamed the crisis on the United States, the dollar is now growing and therefore remains the most reliable global currency. No wonder that Wen Jiabao refused to speak about the dollar.”
http://en.rian.ru/analysis/20081029/118022142.html
@carlo: The Chinese are so deeply involved in the US economy that their position is far more complicated than the one of the Russians. Still, they probably know that sooner or later they will have to either distance themselves from the US market or go down with it. For them, its a very delicate matter of timing.