Russian President Vladimir Putin addresses a plenary session of the St. Petersburg International Economic Forum in St. Petersburg, Russia, on June 16, 2023. Photo: VCG

Over 80 percent of trade settlement between Russia and China is now conducted in Russian rubles and Chinese yuan, Russian President Vladimir Putin said at the St. Petersburg International Economic Forum on Friday, according to media reports.

The Russian president's remarks came amid growing emphasis by both sides on trade in local currency and de-dollarization efforts in a bid to reduce risks and costs.

This came just over a month after Russian Deputy Prime Minister Alexander Novak said in interview with the Russian media that energy trading between China and Russia has been settled in both the yuan and the ruble, according to a report by China's state broadcaster CCTV.

Trade using the yuan, the ruble and the Turkish lira are increasing and becoming common, while deals using the US dollar or the euro are trending down, Novak said.

The trade volume between the two countries is also increasing rapidly. In 2022, the bilateral trade volume between China and Russia was over $190 billion, with energy taking the key share.

In an interview with the Sputnik news agency in March, Chinese Ambassador to Russia Zhang Hanhui revealed that China's purchases of crude oil from Russia in 2022 exceeded 86.25 million tons, an 8 percent increase from a year earlier.

Speaking at an investment forum in Beijing on Friday, Russian Ambassador to China Igor Morgulov also highlighted the trend of using local currencies for trade settlement between the two countries.

From January to May, the bilateral trade volume reached $93 billion, an increase of nearly 40 percent, the Russian Ambassador to China said. Morgulov said this suggests the two sides can fulfill the goal set by the two heads of state ahead of schedule, which is to increase the trade volume between the two countries to $200 billion.

"In the process, we are also constantly adjusting the trade structure, including our dependence on the US dollar and the currencies of other Western countries. In 2021, the local currency settlement in trade between the two countries only accounted for 25 percent or one fourth; last year, it reached two thirds," the ambassador said, noting that efforts will be made to further enhance the independence of financial cooperation between the two countries and further enhance economic sovereignty.

Local currency settlement has gained a strong foothold across all trade sectors, including the China-Europe freight train, which serves as a crucial link between the East and the West in cross-continental trade.

A manager from a Moscow-based railway service operator told the Global Times on Friday that they previously relied solely on US dollars and rubles for payment.

However, they have now adopted the Chinese yuan as well, and their share in the transactions is rapidly increasing.

"This change has facilitated improved cost and risk management, particularly in our cargo train services between China and Europe," the manager said.

Global Times