Amidst escalating global tensions, Russia and China are tightening their alliance, showcasing a unified stance against American policies.
This collaboration is a big change in international relations, reflecting both countries’ intent to challenge U.S. dominance on various fronts.
Leaders Are Not Messing Around
President Vladimir Putin and Chinese Premier Xi Jinping recently held a series of engagements that underline their countries’ growing partnership.
Following a private walk, sensitive discussions ensued, involving Russia’s new defense minister, Andrei Belousov, and his predecessor, Sergei Shoigu, now secretary of the security council.
These talks also included Putin’s chief foreign policy advisors, emphasizing the depth of the dialogue. On a significant note, Putin joined Chinese leaders last Friday to honor Soviet soldiers in northeastern China.
Also Read: Global Impacts of Russia’s Economic Alliance With China
This ceremony, part of a broader series of events including the China-Russia Expo, symbolizes the strengthened ties between the two nations.
While official statements from Chinese leaders have been sparse, the implications of these gestures are clear.
Russia and China Have Been Making Big Economic Moves
The economic interactions between Russia and China are telling of a strategic move away from reliance on Western economic structures.
Recently, China offloaded a staggering $53.3 billion in U.S. treasuries and bonds, the largest such sell-off it has ever conducted, occurring in the first quarter of 2024. This decision coincides with a huge drop in the U.S. dollar’s value, hitting a one-month low of 104.20.
This trend is not isolated. Since 2022, BRICS countries, led by China, have been steadily divesting from U.S. assets, signaling a change towards other reserves, primarily gold.
Last year, China alone added several tonnes of gold, valued at approximately $550 billion, to its reserves. Stephen Chiu, Bloomberg Intelligence’s Chief Asia Foreign-Exchange and Rates Strategist, remarked:
“As China is selling both despite the fact that we are closer to a Fed rate-cut cycle, there should be a clear intention of diversifying away from U.S. dollar holdings.”
The change goes beyond China. Even Belgium, a close U.S. ally, has distanced itself by offloading $22 billion in U.S. treasuries.
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These movements are part of a broader de-dollarization strategy embraced by BRICS nations, aiming to undermine the U.S. dollar’s global hegemony.
BRICS Walk Toward a New Economic Framework
The strategic economic policies of BRICS are culminating in the development of a new currency, a direct challenge to the U.S. dollar’s supremacy.
Iran’s ambassador to Russia, Kazem Jalali, confirmed the collaboration between Russia and Iran on this ambitious project.
“The creation of a new single currency within the framework of the association is what Russia and Iran are working on.”
Kazem Jalali
Jalali stated, noting that over 60% of trade between the two nations now bypasses the U.S. dollar, favoring local currencies instead.
This is part of a strategy aimed at fostering a multipolar world, where economic dominance is more evenly distributed.
The introduction of a BRICS currency could shake global trade at its core, reducing Western influence and enhancing the economic sovereignty of developing nations.
