24

May

12:16am
Saheli Chowdhury India
De-dollarisation Clashes with India-China Border Dispute

De-dollarisation Clashes with India-China Border Dispute

Saheli Chowdhury India//12:16am, May 24th '23

The global de-dollarisation trend is not totally a bed of roses, or at least there are thorns in the roses that have to be taken into account. While de-dollarisation seems to be an irreversible trend on the global scale, at regional levels it is running into bilateral or regional political tensions. In this regard, one of the most prominent cases is in Asia: the India-China border dispute.

In April 2023, the Chinese national currency, yuan, ranked third in international trade settlements made through the US-dominated SWIFT system. According to data from the system itself, yuan’s share in April was “record high,” although that share was only 4.72%, after euro’s 6.54%. The US dollar remained the main trading currency with a share of 83.95% but this was considered as “approaching years-long lows,” given that its share dropped below 84% only twice throughout the history of the SWIFT since the elimination of the gold standard in 1944.

However, these figures do not reflect the real global situation, as numerous countries worldwide, either under US sanctions or threatened with US sanctions, are conducting trade in national currencies outside the SWIFT system, and the most used currency in such transactions is the Chinese yuan. Discussions are ongoing within the BRICS about launching a common currency for transactions among the bloc members. Another line of discussion has also emerged – how about using the yuan in transactions not only with China but also with other like-minded countries? It is this question that has run into one of the most significant border disputes in the world – that between China and India, and the country that has fallen into the middle of this dispute is Russia.

This year, Chinese yuan replaced US dollar as the most traded currency in Russia. Most bilateral trade between Russia and China, which amounted to $185 billion in 2022, is also being conducted in yuan.

At the same time, bilateral trade between Russia and India reached an all-time high of $40 billion in the fiscal year 2022-2023. In fact, Russia became the second largest supplier of goods to India in the first quarter (January-March) of 2023, according to data from the Ministry of Trade and Industry, government of India.

However, according to experts in economy, this trade will receive a "new boost" if the two countries can start trading in yuan.

"Russia would prefer India to pay in Chinese yuan,” comments Chris Devonshire-Ellis, president of business consultancy firm Dezan Shira & Associates. “But due to political and military differences with China, India is unwilling to do so. Therefore, it is interesting that the main problem facing Russia-India trade is actually this matter of the Chinese yuan.”

If you read our blogs then why not our magazine!!!
Image
Click here to subscribe our monthly magazine

Another interesting thing that Indian media refuses to highlight: despite the bilateral dispute, China is the largest supplier of goods to India, and remained so in the same January-March quarter of 2023, although the value of imports recorded a 15.4% decline compared to the same period of 2022.

While the Indian government appears to be a participant in the global de-dollarisation schemes, it also seems to have the policy of actively avoiding the use of yuan in settling accounts in foreign trade. In this context, India’s increasing imports of Russian crude oil has created a significant trade imbalance between the two traditional trade and diplomatic partners, which, in turn, has led to a currency imbalance as well. This imbalance originates from the fact that the Indian government is paying its Russian counterpart in Indian rupees for all of its imports, including oil. This has generated a significant surplus of the Indian currency in Russia, and Moscow is finding it difficult to exchange that in international markets, because unlike yuan, Indian rupee has not become a currency of foreign reserve or international trade.

In addition to a record increase in bilateral trade, India's trade deficit with Russia also reached historic highs of $34.79 billion between April 2022 and January 2023, driven by a significant increase in Russian crude oil exports to India.

The two governments addressed the trade imbalance and market access issues at the India-Russia Intergovernmental Commission on Trade, Economic, Scientific, Technological and Cultural Cooperation (IRIGC -TEC) held in New Delhi in April this year. India and the Eurasian Economic Union (EAEU), of which Russia is the largest player, are also negotiating a free trade agreement to address questions such as diversification of trade and reduction of trade imbalance between partners.

Amid all this, another issue that needs to be urgently discussed is the India-China border dispute. It must be remembered that the border between the two countries is not a real border negotiated through bilateral discussions, but a line imposed by the British while India was a colony of the British Empire and China was being sacked by the same colonial power.

The India-China border dispute, however, goes much beyond the countries. It also involves claims to some territories by Pakistan. The India-Pakistan relation – or lack thereof – is another well-known issue in global geopolitics, which also remains to be resolved. The fate of the China-Pakistan Economic Corridor (CPEC), and even that of the New Silk Route to a certain extent, rest on the resolution of these disputes in South Asia.

Resolving the dispute is not a question of one country being right and another being wrong, contrary to the dominant discussions in media and social media of both countries. It is a question of decolonisation of Asia, which must be a feature of the new multipolar world that is emerging.

Unless this problem gets resolved on the short term, or unless the two governments adopt the reasonable position of not mixing up geopolitics and bilateral politics, the de-dollarisation scenario in Asia will remain complicated.

Editor's Note:

The views and informations expressed in the article are solely those of the author and may or may not reflect the views of The International. We believe in providing a platform for a range of viewpoints from the left.

Roe v Wade and Sexual Violence in the US
Morgan Corvidelle USA//4:04am, Jul 24th '22

Roe v Wade and Sexual Violence in the US

The US Supreme Court overturning the landmark Roe v Wade decision has, predictably and justifiably, resulted in rage, protests, and fear, particularly among USians who can become pregnant. Simply being....

Read More
A Poem by Yanis Iqbal
Yanis Iqbal India//8:27pm, Jan 9th '22

A Poem by Yanis Iqbal

Building On the streets of luxury - beyond the gardens of graves - lies a building,Tall, sturdy, hard.Engraved with glasses of wealth,Splattered with corpses of commodities,A nauseating stench permeates....

Read More
To You Beloved Comrade
Paul Robeson//5:35pm, Dec 21st '22

To You Beloved Comrade

There is no richer store of human experience than the folk tales, folk poems and songs of a people. In many, the heroes are always fully recognizable humans—only larger and more embracing in dimension.....

Read More
In Palestine: the uprising towards unity
Jad Kabbanji//1:28pm, May 21st '21

In Palestine: the uprising towards unity

The Nakba commemoration takes on a very special meaning this year. As we commemorate the 73rd anniversary of the great exodus, the Palestinian people have been subjected to a war of all kinds for several....

Read More
Even more working poor in rich Europe
Dr Werner Rugemer Germany//3:52am, May 27th '22

Even more working poor in rich Europe

In December 2021, Germany's state-run Federal Employment Agency signed an agreement with the Indian state of Kerala: Skilled workers are to come from there to Germany to work in hospitals and nursing homes.....

Read More
The U.S. Prison Industrial Complex, A Domestic Military Operation: Over-Policing, Mass-Incarceration, Slavery, and Capitalism
Karl Fluri Canada//10:27pm, Dec 30th '22

The U.S. Prison Industrial Complex, A Domestic Military Operation: Over-Policing, Mass-Incarceration, Slavery, and Capitalism

Although the United States has branded itself as the bastion of freedom both at home and abroad, it is abundantly clear to any objective observer that, just as U.S. imperialism undermines those claims....

Read More