Bilateral trade agreements between China and several of its major trading partners:
• Russia – Vladamir Putin and Wen Jiabao announced an agreement to conduct bilateral trade in their own currencies in November 2010. This was followed up by the signing of a bilateral currency settlement agreement between their central banks in June 2011.
• Japan – China and Japan announced plans to promote direct exchange of their currencies in December 2011, negating the need to buy dollars. On 1 June 2012, China and Japan began to directly trade their currencies on the inter-bank foreign exchange markets in Shanghai and Tokyo for the first time.
• Germany – following talks in late-August 2012, China and Germany announced an accord to transact an increasing amount of their trade in
Euros and the Yuan. This was from a Reuters report on 30 August 2012: “Germany and China plan to conduct an increasing amount of their trade in euros and yuan, the two nations said in a joint statement after talks between Chancellor Angela Merkel and Chinese Premier Wen Jiabao in Beijing on Thursday. ‘Both sides intend to support financial institutions and companies of both countries in the use of the renminbi and euro in bilateral trade and investments,’ said the text of the statement. It also said that both parties welcomed investments in China's interbank bond market by German banks and supported the settlement of business in the yuan by German and Chinese banks and the issuance of yuan denominated financial products in Germany.
• Australia – in late- March 2012, China and Australia agreed a currency swap with Australia. The Reserve Bank of Australia commented: “The main purposes of the swap agreement are to support trade and investment between Australia and China, particularly in local-currency terms, and to strengthen bilateral financial co-operation…(there were) increasing opportunities available to settle trade between the two countries in Chinese renminbi and to make renminbi-denominated investments.”
Australia is obviously a major exporter of key commodities, like iron ore, coal and agricultural products.
• Brazil – which is the other major supplier of iron ore. Besides the BRICS agreement (above), China and Brazil agreed a currency swap last month;
• Chile – with iron ore sorted out, what about copper? Last month, Chinese Premier Wen Jiabao and Chilean President Sebastian Pinera agreed to upgrade their bilateral ties to a strategic partnership and double trade in three years. The agreement proposed the creation of currency swaps, reportedly to expand settlement in Yuan;
• Taiwan – a currency clearing agreement was signed between China and Taiwan In September 2012. Trade will be settled in local currencies at the Bank of Taiwan in Shanghai.
• UAE – an agreement was reached to settle oil trades between China and the UAE in Yuan.
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