It shouldn’t be any surprise to those paying attention that Russia and China are strengthening their economic ties amidst continued Western sanctions on Russia.
Russia and the BRICS countries, including Brazil, Russia, India, China, and South Africa, are officially working on their own “new global reserve currency,” RT reported in late June. Nobody even seemed to notice.
“The issue of creating an international reserve currency based on a basket of currencies of our countries is being worked out,” Vladimir Putin said at the BRICS business forum in June.
Russia has been cut off from the SWIFT system; it is also pairing with China and the BRIC nations to develop “reliable alternative mechanisms for international payments” in order to “cut reliance on the Western financial system.”
In the meantime, Russia is also taking other steps to strengthen the alliance between BRIC nations, including re-routing trade to China and India, according to CNN
President Vladimir Putin said last Wednesday that Russia is rerouting trade to "reliable international partners" such as Brazil, India, China and South Africa as the West attempts to sever economic ties.
"We are actively engaged in reorienting our trade flows and foreign economic contacts towards reliable international partners, primarily the BRICS countries," Putin said in his opening video address to the participants of the virtual BRICS Summit.
In fact, “trade between Russia and the BRICS countries increased by 38% and reached US$45 billion in the first three months of the year 2022”, the report says. Meanwhile, Russian crude sales to China have hit record numbers during spring of this year, edging out Saudi Arabia as China’s primary oil supplier.
Putin said last month, "Contacts between Russian business circles and the business community of the BRICS countries have intensified. For example, negotiations are underway to open Indian chain stores in Russia and to increase the share of Chinese cars, equipment and hardware on our market."
Putin accused the West of ignoring the basic principles of the market economy" such as free trade. "It undermines business interests on a global scale, negatively affecting the wellbeing of people, in effect, of all countries," he said.
President Xi echoed Putin’s sentiments, according to a June write up by Bloomberg:
“Politicizing, instrumentalizing and weaponizing the world economy using a dominant position in the global financial system to want only impose sanctions would only hurt others as well as hurting oneself, leaving people around the world suffering. Those who obsess with a position of strength, expand their military alliance, and seek their own security at the expense of others will only fall into a security conundrum.”
There is a coordinated global challenge taking place to the US dollar - and it would be the biggest news story in decades. Now, remember that both countries have been working on, and preparing for, this situation for years.
De-dollarization has been a priority for Russia and China since 2014, when they began expanding economic cooperation following Moscow's estrangement from the West over its annexation of Crimea. Replacing the dollar in trade settlements became a necessity to sidestep US sanctions against Russia.
It seems to that the BRIC nations understand exactly how precarious of a financial situation the US and US dollar - is in. Despite the dollar’s recent strengthening, these nations have been in the midst of a multi-decade-long plan to de-dollarize.
Even before the Ukraine conflict started, both China and Russia were stockpiling gold and working on denominating transactions outside of the US dollar. It was another “secret” that was out there in the open.
Since the BRIC conference, ties between Russia and China continue to tighten, with Japan even warning this week about the pair’s strengthening of military ties - at the same time China has closely scrutinized a planned trip by House Speaker Nancy Pelosi to Taiwan.
“As a result of the current aggression, it is possible that Russia’s national power in the medium to long term may decline, and the military balance within the region and military cooperation with China may change.
In the vicinity of Japan, Russia has made moves to strengthen cooperation with China, such as through joint bomber flights and joint warship sails involving the Russian and Chinese militaries, as well as moves to portray such military cooperation as strategic coordination.”
Japan said this alignment between the two countries “must continue to be closely watched in the future.”
While the economic gears turn behind the scenes, China is also becoming increasingly cagey about Taiwan. The country has sent warplanes into Taiwan's self-declared air defense zone identification zone many times in recent months, according to CNN, and recently alluded to the idea of a no-fly zone over Taiwan ahead of a planned visit by Nancy Pelosi.
President Biden commented on Pelosi’s travel plans this week, stating, “The military thinks it’s not a good idea right now. But I don’t know what the status of it is.”
We’re sure Pelosi will wind up going anyway. Remember, this is the same woman who danced her way through Chinatown while Covid was spreading to the US, from China, to prove she wasn’t racist.
