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Russia
Feb. 28, 2023 Energy exporters are increasingly getting paid in yuan. Russia began cutting its dependence on the dollar in 2014 after its annexation of Crimea. By 2018, as the U.S. imposed additional economic sanctions, the country began to sell its holdings of U.S. Treasury bonds and explore trade in rubles and other currencies. De-dollarization went into overdrive, and widened to include the euro, last year. Western countries froze some $300 billion of Russia’s foreign reserves and banned some of its banks from the SWIFT messaging system that underpins most global payments in response to Russia’s invasion of Ukraine. China launched a cross-border payments system known as CIPS in 2015 that has been billed as an eventual competitor to the 50-year-old SWIFT network. But its system hasn’t yet been widely adopted by other countries. China has become a major buyer of Russian oil that is shunned by the West, while Russia has grown more dependent on China for semiconductors and other technology. Russian and Chinese banks rely on networks of local branches and correspondent banks to process transactions without SWIFT. Russian companies issued bonds in the Chinese currency also known as renminbi worth the equivalent of more than $7 billion last year. Aluminum giant Rusal was the first company to issue yuan bonds inside Russia last August, and other commodity exporters like oil firm Rosneft followed. The share of Russian exports paid for in yuan rose to 14% by September, according to data from the central bank. That is up from 0.4% before the start of the war. Russia’s sovereign-wealth fund, which doubled the share of yuan it can hold to 60% in December, is using the Chinese currency to store its oil riches. The Russian Finance Ministry started selling yuan in January to plug its widening budget deficit. The first yuan-denominated exchange-traded fund launched on the Moscow Exchange in January. In recent weeks, the yuan-ruble was often the most traded currency pair on the Moscow Exchange based on daily volume.The Russian central bank this month set up an international settlements department it said would focus on expanding settlements in national currencies. Russian households are stashing savings in yuan. Russians don’t face an outright ban on using dollars or euros, and non-sanctioned banks continue to do business in foreign currencies. Russian financial blogger and consultant Gogaladze, who has more than 2 million Instagram followers, in October published a guide to the yuan after being inundated with questions about the currency last year. Russians have long bought dollars and euros to protect themselves against the ruble’s volatility. That changed last year as banks instituted fees on those accounts and many worried about the impact of Western sanctions. “Conversations were going around about the end of the dollar,” Ms. Gogaladze said. “The yuan was presented as an available alternative.” Households held almost $6 billion worth of yuan deposited at the end of last year at Russian banks, according to data from the central bank. That is up from zero at the start of the year, and is now more than a 10th of the $53 billion in foreign currency that households held. Nearly 50 financial institutions offer yuan savings accounts, according to comparison site Banki.ru. Bistrodengi, a Russian lending platform, started selling yuan bonds last year despite not doing any business in the Chinese currency. While Russia’s use of the yuan doesn’t mean the end of dollar supremacy, it may usher in the beginning of a more fractured system that could ultimately blunt the U.S.’s ability to use financial sanctions as a weapon, said McDowell, a professor at Syracuse University who recently wrote a book on the topic. “The more countries you force to find those alternatives,” Mr. McDowell said, “effectively what you’re going to do is increase economies of scale and experience in those areas.” (Source: TheWallStreetJournal)
China
2023.02.28 Party leader Xi - who is now serving a third term with no formal requirement to step down - told a high-level political meeting in Beijing today that the upcoming session of China's rubber-stamp parliament, the National People's Congress, would see the party strengthen "unified leadership" over scientific and technological institutions, as well as over the country's financial institutions and over 'government responsibility.' The announcement suggests further internal crackdowns to come within the government and party. A draft institutional reform plan is currently under discussion that will "be more relevant, more intensive, have a broader reach and touch on deeper interests" than previous structures, state broadcaster CCTV quoted Xi as telling the meeting. The ministries of human resources and social security may integrate with the ministry of civil affairs, the pro-China Singapore-based Lianhe Zaobao newspaper reported. The paper also quoted analysts as saying that the reform 'will further highlight the leadership of the Chinese Communist Party and weaken the power of the government.' Japan-based China commentator Hong said the plans will likely include bringing the ministry for public security, which governs the police system, and the ministry for state security, which governs the state security apparatus and overseas intelligence operations, under the aegis of the party. "It will turn government departments into administrative offices, tasked with running errands and doing the gruntwork," Hong said. "They will carry out the basic administrative work, but the core of policy-making will be taken away, and go to strengthen the leadership of the party," he said. The reforms will likely include the setting up of a powerful internal affairs committee under the central leadership of the Communist Party in Beijing. China's reforms could create Soviet-style super-commission under party control. If the reforms do implement such a plan, the internal affairs committee could look fairly similar to the People’s Commissariat for Internal Affairs under the former Soviet Union, which was responsible for ensuring internal revolutionary order and the security of the state, as well as the internal safeguarding of state property, the guarding of national borders, and the registration of births, deaths, marriages and divorces, according to a July 11, 1934 report in the Soviet newspaper Izvestia. Such a plan, if implemented, comes at a time of unprecedented official control over people's personal and political lives, with the transfer of law-enforcement powers to local neighborhood committees and the setting up of local militias to boost "stability maintenance," a system of law enforcement aimed at forestalling dissent and nipping protest in the bud. Structural reforms by the ruling Chinese Communist Party leadership that could bring government security and intelligence branches under the direct control of the ruling party, at the expense of the state rather, suggest a further bid to consolidate political power in the hands of leader Xi as well as a possible preparation for war, analysts said. The Chinese state is already subordinate to the political power of the ruling party, but Xi has sought to amplify that principle still further in his own brand of political ideology. Veteran journalist Ma said the theme of the reforms appeared to herald more aggressive party control over every aspect of people's lives, a concept that is in line with reforms that have already taken place under Xi. Since taking power in 2012, Xi has already boosted his own personal power at the expense of other high-ranking leaders, particularly his premier, from whom he has taken back responsibility for running the economy in recent years. 'Now we're seeing that they need to sharpen their knives, for use both externally and internally.' 'They will control everything, plan everything and order everything.' They'll be taking China back to the 1950s by setting up the Commissariat for Internal Affairs, or rather putting China back on a wartime footing," Ma said. "The ministry of public security has always been obedient to the party, but now it's going to need to cooperate with decisions passed just a couple of days earlier, as part of a military-led system engaged in the mighty struggle," he said, in a possible reference to Xi's threat to invade democratic Taiwan. The Lianhe Zaobao quoted Lu, an assistant professor at the Lee Kuan Yew School of Public Policy at the National University of Singapore, as saying that the restructuring will further blur the distinction between party and state. "The status of the State Council and the importance of the prime minister in the country's operation and decision-making process will be further weakened." "China is gearing up for the new development era [under Xi's leadership] while facing complicated domestic and international situations," the English-language Global Times newspaper said. The 14th National People's Congress will open in Beijing on March 5. (Source: RadioFreeAsia)
India
Friday, February 24th 2023 India abstains on UN resolution calling for ‘just and lasting peace’ in Ukraine. India’s Permanent Representative to the United Nations, Ambassador Kamboj, said it was important for the global community to ask itself some pertinent questions. “Are we anywhere near a possible solution acceptable to both sides?” she asked while explaining India’s decision to abstain. “Can any process that does not involve either of the two sides, ever lead to a credible and meaningful solution?” “Has the UN system, and particularly its principal organ, the UN Security Council, based on a 1945-world construct, not been rendered ineffective to address contemporary challenges to global peace and security?” The diplomat said that India continues to remain concerned about the situation in Ukraine. “The conflict has resulted in the loss of countless lives and misery, particularly for women, children, and the elderly, with millions becoming homeless and forced to seek shelter in neighbouring countries,” the Indian statement read. “Reports of attacks on civilians and civilian infrastructure are also deeply worrying.” The Indian representative said that no solution could be reached at the cost of human lives. “In this context, our prime minister’s statement that this cannot be an era of war bears reiteration,” she said. Kamboj said that India’s approach to the Ukraine conflict continues to be people-centric and that it is providing humanitarian assistance to the east European country. (Source: Scroll)
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