Friday, October 17, 2014

Russia - China sign several new deals and a huge currency swap

Chess moves continue all around the global board. With the US still trying to impose sanctions on Russia, China and Russia announce the signing of several new deals and a huge currency swap. Some quotes from this BRICSPost article below.


"Russia and China have signed several multi-billion dollar deals on Monday, including nuclear energy, finance, tourism, high-speed railways, apart from the agreement on gas deliveries to China via the eastern route."
"Chinese and Russian Premiers Dmitry Medvedev and Li Keqiang have held the 19th Regular Meeting of the Heads of Government in Moscow during which 40 inter-governmental agreements were signed."
"The two allies have also signed a massive currency swap deal worth $24.4 billion. The agreement was inked between the People’s Bank of China (PBOC) and the Russian Central Bank on Monday “to facilitate bilateral trade and investment”.
"The agreement lasts for three years and can be extended if both sides agree, the PBOC said on Monday in a statement on its website."
"Beijing is keen on substituting the US dollar with the yuan in all of China’s trade with other countries. The Chinese currency now trades directly with the Japanese yen, the Australian dollar, the Brazilian real, the EU’s euro, the New Zealand dollar and many other currencies."
"Moscow is looking to increase trade and banking cooperation with Beijing, even as it battles new rounds of sanctions imposed by the EU and US over the Ukraine crisis."
"Putin said, earlier this year, that Russia-China ties “will significantly affect the contemporary architecture of international relations”.
“It is absolutely clear that we will be expanding collaboration with China. Our trade with the United States is 27.5 [billion], but trade with China is 87 billion, and it is growing. And experts will agree that China is gradually becoming the number one economic power. The question is when it will happen: in 15, 20 or 25 years. But everybody understands that it is inevitable,” asserted Putin."
My added comment: Note Putin makes sure to mention that China will become the #1 economic power and that Russia does much more trade with China than the US. But also note he says it will be a long time before China assumes the #1 position (at least 15 years).
As we watch all these global chess moves the question to keep in mind is: 
Are all these moves by the BRICS nations really designed to pull out of the existing global financial system OR are they just trying to put pressure on the existing global financial institutions to "reset" the voting structure to give them more influence? And to dethrone the US dollar as the sole global reserve currency? Time will tell.

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