Russia’s Ministry of Finance announced Nov. 25 that it will offer renminbi-denominated bonds for sale for the first time on Dec. 8. Investors can pay for the bonds and receive coupon payments in both renminbi and rubles. Maturities will range from three to seven years, and the Ministry said the amount to be issued will be set after the market closes on Dec. 2, BRICS portal reported. The bonds are likely to be largely bought by Russians residing in the country, given that Gazprombank, Sberbank, and VTB Capital, the banks being used to organize the placement, and the Moscow Stock Exchange on which they are to be offered, are all under Western sanctions.
With 90% of Russian-Chinese trade being carried out in their national currencies, Russian banks and exporters have accumulated large RMB reserves. The idea of the bonds is to channel some of those reserves into the Russian budget and national investments, it is assumed.
This has apparently set up a kerfuffle in certain Western circles. Global Times published an editorial on Dec. 2, countering those who portray this “perfectly ordinary financing operation” as a “geopolitical confrontation,” and who accuse China of being out “to compete for global influence” or “to challenge the dollar system.”
The growing use of the RMB in international finance does not come from any push by China, Global Times points out. It reflects China’s economic strength in the world as the world’s largest trading nation in goods, plus the BRI plays a role. “When Chinese companies build overseas railways, export new energy equipment, or engage in cross-border ecommerce, using the yuan for settlement not only helps avoid exchange rate risk—it also improves transaction efficiency,” they note.
These may be Russia’s first RMB bonds, but countries ranging from the U.K. to Indonesia, Hungary, and the U.A.E., along with others, have already done so, and Kazakhstan and Kenya are in the process of doing so, too, Global Times reports. In the fourth quarter of 2024, total RMB assets in global foreign-exchange reserves stood at roughly $247 billion, with 8.5% of total global currency transactions this October carried out in RMB, it adds.
“A currency’s international status is never the result of self-proclamation…. The internationalization of the yuan has always been a natural outgrowth of China’s economic development and its opening-up, which is a path fundamentally different from those countries that rely on military alliances or political pressure to sustain their currency status. The yuan is gaining favor because it is a practical choice, not part of a confrontation,” Global Times concludes. “The world does not need more conflict, but it certainly needs more options.”
