Saudi Arabia Joining BRICS Would Accelerate Chinese Yuan’s Use as Trading Currency, Says Professor
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Professor Ashok Swain of Uppsala University’s Department of Peace and Conflict Research says Saudi Arabia joining the BRICS economic bloc “would accelerate the bilateral trading being conducted using the yuan as the trading currency. ”
How Saudi Arabia Joining BRICS Could Boost Use of Chinese Yuan
Ashok Swain, a professor of peace and conflict research at Uppsala University in Sweden, told Al-Monitor last week that Saudi Arabia joining the BRICS economic bloc would accelerate the use of the Chinese yuan as a trading currency. Professor Swain is head of Uppsala University’s Department of Peace and Conflict Research. He is also the UNESCO chair on International Water Cooperation.
Commenting on Saudi Arabia joining the Shanghai Cooperation Organization (SCO) and the BRICS, which comprises Brazil, Russia, India, China, and South Africa, he said:
There is no doubt that Saudi Arabia becoming a member of China-dominated SCO and BRICS would accelerate the bilateral trading being conducted using the yuan as the trading currency.
In March, Saudi Arabia became a dialogue partner of the SCO. The Shanghai Cooperation Organization was established in 2001 as a political, economic, and defense alliance; it is the world’s largest regional organization. Saudi Arabia is not yet a member of the BRICS group but the country has expressed interest in joining. Last month, Russian President Vladimir Putin and Saudi Crown Prince Mohammed bin Salman Al Saud discussed potential collaboration between Saudi Arabia and the BRICS.
Meanwhile, Saudi Arabia is actively negotiating with Beijing to price some of its oil sales to China in yuan, according to reports. While the discussions regarding yuan-priced oil contracts have been taking place on and off for six years between the two nations, they have intensified this year. The Uppsala professor noted that oil trade in yuan will be a “huge step” for China and “a significant setback to the dollar’s standing.”
A growing number of countries are shifting away from using U.S. dollars to settle trades. China’s yuan recently replaced the USD as the most traded currency in Russia as well as the most used currency to settle cross-border payments in China.
The BRICS group is also working to create a new currency that would reduce its member countries’ reliance on the U.S. dollar. A former White House economist believes that a BRICS currency will erode the U.S. dollar’s dominance. Another economist predicted that the yuan and euro will disrupt the U.S. dollar’s dominance and the three will form a tripolar reserve currency world.