Saudi Press

Saudi Arabia and the world
Wednesday, Nov 12, 2025

China and Russia ditch dollar in move toward 'financial alliance'

Russia and China are partnering to reduce their dependence on the dollar - a development some experts say could lead to a "financial alliance" between them.
In the first quarter of 2020, the dollar's share of trade between Russia and China fell below 50% for the first time on record, according to recent data from Russia's Central Bank and Federal Customs Service.

The greenback was used for only 46% of settlements between the two countries. At the same time, the euro made up an all-time high of 30%, while their national currencies accounted for 24%, also a new high.

Russia and China have drastically cut their use of the dollar in bilateral trade over the past several years. As late as 2015, approximately 90% of bilateral transactions were conducted in dollars. Following the outbreak of the U.S.-China trade war and a concerted push by both Moscow and Beijing to move away from the dollar, however, the figure had dropped to 51% by 2019.

Alexey Maslov, director of the Institute of Far Eastern Studies at the Russian Academy of Sciences, told the Nikkei Asian Review that the Russia-China "dedollarization" was approaching a "breakthrough moment" that could elevate their relationship to a de facto alliance.

"The collaboration between Russia and China in the financial sphere tells us that they are finally finding the parameters for a new alliance with each other," he said. "Many expected that this would be a military alliance or a trading alliance, but now the alliance is moving more in the banking and financial direction, and that is what can guarantee independence for both countries."

Dedollarization 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 U.S. sanctions against Russia.

"Any wire transaction that takes place in the world involving U.S. dollars is at some point cleared through a U.S. bank," explained Dmitry Dolgin, ING Bank's chief economist for Russia. "That means that the U.S. government can tell that bank to freeze certain transactions."

The process gained further momentum after the Donald Trump administration imposed tariffs on hundreds of billions of dollars worth of Chinese goods. Whereas previously Moscow had taken the initiative on dedollarization, Beijing came to view it as critical, too.

"Only very recently did the Chinese state and major economic entities begin to feel that they might end up in a similar situation as our Russian counterparts: being the target of the sanctions and potentially even getting shut out of the SWIFT system," said Zhang Xin, a research fellow at the Center for Russian Studies at Shanghai's East China Normal University.

In 2014, Russia and China signed a three-year currency swap deal worth 150 billion yuan ($24.5 billion). The agreement enabled each country to gain access to the other's currency without having to purchase it on the foreign exchange market. The deal was extended for three years in 2017.

Another milestone came during Chinese President Xi Jinping's visit to Russia in June 2019. Moscow and Beijing struck a deal to replace the dollar with national currencies for international settlements between them. The arrangement also called for the two sides to develop alternative payment mechanisms to the U.S.-dominated SWIFT network for conducting trade in rubles and yuan.

Beyond trading in national currencies, Russia has been rapidly accumulating yuan reserves at the expense of the dollar. In early 2019, Russia's central bank revealed that it had slashed its dollar holdings by $101 billion -- over half of its existing dollar assets. One of the biggest beneficiaries of this move was the yuan, which saw its share of Russia's foreign exchange reserves jump from 5% to 15% after the central bank invested $44 billion into the Chinese currency.

As a result of the shift, Russia acquired a quarter of the world's yuan reserves.

Earlier this year, the Kremlin granted permission to Russia's sovereign wealth fund to begin investing in yuan and Chinese state bonds.

Russia's push to accumulate yuan is not just about diversifying its foreign exchange reserves, Maslov explained. Moscow also wants to encourage Beijing to become more assertive in challenging Washington's global economic leadership.

"Russia has a considerably more decisive position toward the United States [than China does]," Maslov said. "Russia is used to fighting, it does not hold negotiations. One way for Russia to make China's position more decisive, more willing to fight is to show that it supports Beijing in the financial sphere."

Dethroning the dollar, however, will not be easy.

Jeffery Frankel, an economist at Harvard University, told Nikkei that the dollar enjoys three major advantages: the ability to maintain its value in the form of limited inflation and depreciation, the sheer size of the American domestic economy, and the United States having financial markets that are deep, liquid and open. So far, he argued, no rival currency has shown itself capable of outperforming the dollar on all three counts.

Yet Frankel also warned that while the dollar's position is secure for now, spiraling debts and an overly aggressive sanctions policy could erode its supremacy in the long run.

"Sanctions are a very powerful instrument for the United States, but like any tool, you run the risk that others will start looking for alternatives if you overdo them," he said. "I think it would be foolish to assume that it's written in stone that the dollar will forever be unchallenged as the number one international currency."
Newsletter

Related Articles

Saudi Press
0:00
0:00
Close
Cristiano Ronaldo Embraces Saudi Arabia’s 2034 World Cup Vision with Key Role
Saudi Arabia’s Execution Campaign Escalates as Crown Prince Readies U.S. Visit
Trump Unveils Middle East Reset: Syria Re-engaged, Saudi Ties Amplified
Saudi Arabia to Build Future Cities Designed with Tourists in Mind, Says Tourism Minister
Saudi Arabia Advances Regulated Stablecoin Plans with Global Crypto Exchange Support
Saudi Arabia Maintains Palestinian State Condition Ahead of Possible Israel Ties
Chinese Steel Exports Surge 41% to Saudi Arabia as Mills Pivot Amid Global Trade Curbs
Saudi Arabia’s Biban Forum 2025 Secures Over US$10 Billion in Deals Amid Global SME Drive
Saudi Arabia Sets Pre-Conditions for Israel Normalisation Ahead of Trump Visit
MrBeast’s ‘Beast Land’ Arrives in Riyadh as Part of Riyadh Season 2025
Cristiano Ronaldo Asserts Saudi Pro League Outperforms Ligue 1 Amid Scoring Feats
AI Researchers Claim Human-Level General Intelligence Is Already Here
Saudi Arabia Pauses Major Stretch of ‘The Line’ Megacity Amid Budget Re-Prioritisation
Saudi Arabia Launches Instant e-Visa Platform for Over 60 Countries
Dick Cheney, Former U.S. Vice President, Dies at 84
Saudi Crown Prince to Visit Trump at White House on November Eighteenth
Trump Predicts Saudi Arabia Will Normalise with Israel Ahead of 18 November Riyadh Visit
Entrepreneurial Momentum in Saudi Arabia Shines at Riyadh Forward 2025 Summit
Saudi Arabia to Host First-Ever International WrestleMania in 2027
Saudi Arabia to Host New ATP Masters Tournament from 2028
Trump Doubts Saudi Demand for Palestinian State Before Israel Normalisation
Viral ‘Sky Stadium’ for Saudi Arabia’s 2034 World Cup Debunked as AI-Generated
Deal Between Saudi Arabia and Israel ‘Virtually Impossible’ This Year, Kingdom Insider Says
Saudi Crown Prince to Visit Washington While Israel Recognition Remains Off-Table
Saudi Arabia Poised to Channel Billions into Syria’s Reconstruction as U.S. Sanctions Linger
Smotrich’s ‘Camels’ Remark Tests Saudi–Israel Normalisation Efforts
Saudi Arabia and Qatar Gain Structural Edge in Asian World Cup Qualification
Israeli Energy Minister Delays $35 Billion Gas Export Agreement with Egypt
Fincantieri and Saudi Arabia Agree to Build Advanced Maritime Ecosystem in Kingdom
Saudi Arabia’s HUMAIN Accelerates AI Ambitions Through Major Partnerships and Infrastructure Push
IOC and Saudi Arabia End Ambitious 12-Year Esports Games Partnership
CSL Seqirus Signs Saudi Arabia Pact to Provide Cell-Based Flu Vaccines and Build Local Production
Qualcomm and Saudi Arabia’s HUMAIN Team Up to Deploy 200 MW AI Infrastructure
Saudi Arabia’s Economy Expands Five Percent in Third Quarter Amid Oil Output Surge
China’s Vice President Han Zheng Meets Saudi Crown Prince as Trade Concerns Loom
Saudi Arabia Unveils Vision for First-Ever "Sky Stadium" Suspended Over Desert Floor
Francis Ford Coppola Auctions Luxury Watches After Self-Financed Film Flop
US and Qatar Warn EU of Trade and Energy Risks from Tough Climate Regulation
‘No Kings’ Protests Inflate Numbers — But History Shows Nations Collapse Without Strong Executive Power
Ofcom Rules BBC’s Gaza Documentary ‘Materially Misleading’ Over Narrator’s Hamas Ties
"The Tsunami Is Coming, and It’s Massive": The World’s Richest Man Unveils a New AI Vision
Yachts, Private Jets, and a Picasso Painting: Exposed as 'One of the Largest Frauds in History'
AI and Cybersecurity at Forefront as GITEX Global 2025 Kicks Off in Dubai
EU Deploys New Biometric Entry/Exit System: What Non-EU Travelers Must Know
Ex-Microsoft Engineer Confirms Famous Windows XP Key Was Leaked Corporate License, Not a Hack
China’s lesson for the US: it takes more than chips to win the AI race
Israel and Hamas Agree to First Phase of Trump-Brokered Gaza Truce, Hostages to Be Freed
The Davos Set in Decline: Why the World Economic Forum’s Power Must Be Challenged
Wave of Complaints Against Apple Over iPhone 17 Pro’s Scratch Sensitivity
Syria Holds First Elections Since Fall of Assad
×