China, Russia to promote ruble, yuan use in trade

The leaders of China and Russia have agreed to expand use of the yuan and ruble in bilateral trade to lessen dependence on the U.S. dollar a day after they took part in the first summit of the BRIC countries.

"We agreed to take further steps in this direction, including, perhaps, by adjusting contracts and laws that already exist," Russian President Dmitry Medvedev told reporters in the Kremlin Wednesday after talks with his Chinese counterpart Hu Jintao.

Russia, the world's biggest energy supplier, wants to start selling oil to China in rubles, said Deputy Prime Minister Igor Sechin, who added energy sales in rubles are a "strategic" issue for Russia.

Oil exports to China over the next 20 years will surpass $100 billion, said the official.

China has the world's biggest foreign-currency reserves, almost $2 trillion, while Russia is third with more than $400 billion.

Expanding the use of national currencies in trade and in mutual settlements "is a separate, important task," Medvedev said.

Total trade between the neighboring countries reached a record $56.8 billion last year, according to the Kremlin. Data from Russia's Economy Ministry showed that China has become Russia's biggest trade partner, overtaking Germany and the Netherlands.

After the Moscow meeting, Russia and China signed an agreement worth $3 billion to cooperate in trade and investment in areas including light industries, high technology and energy, according to a report by Bloomberg News.

The dollar's status has come into question as leaders of the BRIC nations consider substituting other assets for their dollar holdings amid a ballooning budget deficit that keeps the U.S. dependent on foreign financing, the report said.

China, Russia, Brazil and India agreed to push for more clout in global financial institutions during the just-concluded first summit of BRIC countries in the Ural Mountains city of Yekaterinburg.

China and Russia have called for a more diversified financial system to give emerging economies a bigger say in economic affairs, including the creation of alternatives to the U.S. dollar as a reserve currency.

Data from the U.S. Treasury showed China pared its stake in Treasury bonds by 4.4 billion U.S. dollars, to 763.5 billion U.S. dollars, as of the end of April compared with March.

It's the first time in more than one year that China has reduced its holding of U.S. Treasury bonds, a move that experts said reflected China's concern over the safety of U.S.-dollar-linked assets.

Russian central bank First Deputy Chairman Alexei Ulyukayev's comment on June 10 that Russia may sell some of its U.S. bonds to buy International Monetary Fund notes helped push 10-year yields on Treasuries to the highest level since October.