Brazil’s president Luiz Inácio Lula da Silva has called on developing countries to work towards replacing the US dollar with their own currencies in international trade.
“Every night I ask myself why all countries have to base their trade on the dollar,” Lula said in an impassioned speech at the New Development Bank in Shanghai, known as the “Brics bank”.
“Why can’t we do trade based on our own currencies?” he added, drawing loud applause. “Who was it that decided that the dollar was the currency after the disappearance of the gold standard?”
Brazil’s Lula calls for end to dollar trade dominance
Leftist president lends his voice to Beijing’s efforts to boost renminbi’s role in global commerce
Financial Times
https://www.ft.com/content/669260a5-82a5-4e7a-9bbf-4f41c54a6143
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https://www.ft.com/content/669260a5-82a5-4e7a-9bbf-4f41c54a6143
Brazil’s president Luiz Inácio Lula da Silva has called on developing countries to work towards replacing the US dollar with their own currencies in international trade, lending his voice to Beijing’s efforts to end the greenback’s dominance of global commerce.
Kicking off his first state visit to China since taking office in January, Lula called for the countries of the so-called Brics group of nations — which in addition to Brazil and China includes Russia, India and South Africa — to come up with their own alternative currency for use in trade.
“Every night I ask myself why all countries have to base their trade on the dollar,” Lula said in an impassioned speech at the New Development Bank in Shanghai, known as the “Brics bank”.
“Why can’t we do trade based on our own currencies?” he added, drawing loud applause from the audience of Brazilian and Chinese dignitaries. “Who was it that decided that the dollar was the currency after the disappearance of the gold standard?”
Lula’s call to shed dollar dependence dovetailed with Beijing’s increasing efforts to promote use of the renminbi in settlement of cross-border commodities trades, as Chinese policymakers seek to strengthen the role of the world’s second-largest economy in the global financial system.
The warm reception in Shanghai also came as Brazil’s leftist leader has sought to redirect the country’s foreign policy to a more multilateralist stance, with an emphasis not only on good relations with the US — he visited President Joe Biden in February — but also with China and the developing world.
Lula’s far-right predecessor Jair Bolsonaro had prioritised bilateral ties with the US under former president Donald Trump and other nations led by populist leaders such as Hungary and Israel.
China’s leader Xi Jinping will be keen to persuade the Brazilian president when they meet on Friday to demonstrate that appetite for rebalancing by backing a number of Beijing’s foreign policy initiatives.
These range from the Belt and Road trade and infrastructure programme to other schemes that seek to create alternative international governance systems to those dominated by the US.
Bilateral trade has ballooned over the past decade to $150.4bn last year, with China buying Brazil’s agricultural commodities and minerals and investing in the Latin American country’s large consumer market and infrastructure sector. On Thursday, Lula also visited Huawei, the Chinese telecom equipment company that is subject to US sanctions.
The growing economic relationship has encouraged both countries to promote greater use of their respective currencies in bilateral trade. This week, the Brazilian branch of the state-owned Industrial and Commercial Bank of China settled its first transaction directly in renminbi in the country, Chinese state media reported.
Lula, who was also in Shanghai for the inauguration of his protégé, former Brazilian president Dilma Rousseff, as head of the New Development Bank, used the occasion to make impassioned speech about the need for the Brics countries to trade in their own currencies. Aside from the Brics, the bank’s membership includes Egypt, Bangladesh, Uruguay and the United Arab Emirates.
“Who decided that our currencies were weak, that they didn’t have value in other countries?” he said.
“Why can’t a bank like that of the Brics have a currency to finance trade relations between Brazil and China, between Brazil and other countries? It’s difficult because we are unaccustomed [to the idea]. Everyone depends on just one currency.”
Data from global payments platform Swift shows the Chinese currency’s share of trade finance has more than doubled to 4.5 per cent since Russia’s full-scale invasion of Ukraine last year, largely on the back of a boom in shipments between Russia and China.
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https://www.ft.com/content/669260a5-82a5-4e7a-9bbf-4f41c54a6143
Maggie Wei, an economist at Goldman Sachs, said there were structural reasons to expect a growing Chinese share of global trade finance.
“In light of the renminbi’s comparatively small role in trade finance relative to China’s market share of around 15 per cent in global goods trade . . . it makes sense for the currency’s share of trade finance to continue rising,” Wei said.
But any effort by Brazil to spurn the US currency in the near term will face a substantial challenge. The dollar is vital to global commodities markets and benchmarks, which encourages top Brazilian miners such as Vale to keep most transactions dollar-denominated.
ドル覇権、終わりの始まりか 新興国が自国通貨シフト
by 吉田ありさ
日本経済新聞
https://www.nikkei.com/article/DGXZQOCD157DS0V10C23A5000000/
ロシアと中国。続いて中国とブラジル、アルゼンチン。インドとマレーシア。新興国が相次ぎ為替取引で米ドルを介さず自国通貨を使う取り組みを始め、ドル覇権を巡る議論が騒がしくなってきた。ドルから離れる側の思いは、4月13日、上海の新開発銀行（通称BRICS銀行）でのブラジルのルラ大統領の呼びかけに凝縮される。「なぜ全ての国が自国の貿易取引をドル建てでしなければならないのか」
中国の2国間決済、人民元初の米ドル超え 23年4〜6月
日本経済新聞
https://www.nikkei.com/article/DGXZQOGM111IK0R10C23A7000000/
中国が取引相手となる2国間決済で、中国の通貨・人民元の利用が広がっている。企業や機関投資家などによる決済通貨を集計したところ、人民元建ての割合は2023年4〜6月期に49%となり、初めて米ドル建てを上回った。資本市場の開放やロシアとの取引拡大の影響が大きい。世界全体の決済では人民元比率は3%弱にとどまるが、「ドル離れ」が進み始めた。
新興国「ドル依存はリスク」 地域通貨や人民元シフトも
揺らぐドル1強（1）
by 柯隆
日本経済新聞
https://www.nikkei.com/article/DGXZQOGN150AP0V10C23A7000000/
7月4日、南米3カ国が国境を接する大瀑布（だいばくふ）、イグアスの滝からの轟音（ごうおん）が聞こえるホテルに南米の首脳が集まっていた。ブラジル大統領のルラが高らかに宣言する。「我々の国と国の間は共通通貨で決済しよう」
南米一の経済大国、ブラジルと2位のアルゼンチンは1月、両国間の共通通貨構想を発表していた。ルラは「なぜ（貿易決済で）自国通貨でなく、米ドルを使用すべきなのか？」と貿易決済のドル1強…
Global economic outlook dims amid geoeconomic fragmentation
Hinrich Foundation
https://www.hinrichfoundation.com/research/what-we-are-reading/global-economic-outlook-dims-amid-geoeconomic-fragmentation/
Global trade and economic outlook
The International Monetary Fund (IMF) and the World Trade Organization (WTO) published a pair of reports estimating future economic and trade growth. While the IMF’s World Economic Outlook sees a rocky recovery while closely examining the role of geoeconomic fragmentation in FDI flows, the WTO’s Global Trade Outlook expects goods trade to increase slightly more than expected.
Mentioned publications
The IMF alerts the world to the downsides of friend-shoring and increasing geoeconomic fragmentation.
The WTO expects annual goods trade in 2023 to increase by 1.7%, an improvement from its October forecast.
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Competition over critical minerals
In a new paper, the OECD notes a sharp increase in export restrictions on critical raw materials over the past decade. Cecilia Malmstrom sees hope for a new transatlantic trade accord amidst the scramble for rare earths, while Cullen S. Hendrix envisions the ups and downs of a new lithium discovery in Kashmir. South American lithium sources could help power America’s net zero transition but may be hampered by a history of American interventionism in the region. China may ban exports of magnet technologies used in green energy goods, while China may soon dominate the development of sodium-based batteries, per the New York Times. All of these developments point to a green upheaval and the new geopolitics of energy.
The Hinrich Foundation has made its own important contribution to this discussion with Akhil Ramesh and Rob York’s paper, Friend-shoring critical mineral supply chains.
Mentioned publications
Export restrictions on critical raw materials quintupled in the last decade.
Can the US and the EU find common ground over critical minerals?
India has discovered 5.9 million tons of lithium resources in Jammu and Kashmir.
Latin American lithium powerhouses may be wary after a history of US interventionism.
China may ban exports of technologies needed for magnets used in EVs and wind turbine motors.
China is leading the development of rechargeable batteries using sodium to replace lithium.
Will national security concerns and geopolitical competition undermine the transition to net zero?
The world is reconsidering its dependence on China for critical minerals.
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Semiconductor supply chains shift
Japan announces semiconductor equipment export restrictions that will affect Chinese production, reports Nikkei Asia. China alleges that an agreement amongst the US, Netherlands, and Japan to restrict exports to China violates WTO rules, while launching its own review of imports from US chipmaker Micron. Thailand, Vietnam, India and Cambodia are gaining from efforts to diversify chip suppliers, writes Bloomberg. In the aftermath of US export restrictions, China may expand its share of the mature chip sector, notes the Rhodium Group in a new report.
Mentioned publications
Japan announces restrictions on semiconductor equipment exports to China.
Could an agreement between the US, Netherlands, and Japan violate WTO rules?
China launched a cybersecurity review of imports from America’s largest memory-chip maker, Micron.
Thailand, Vietnam, India and Cambodia have seen significant increases in semiconductor exports.
China is expanding production in mature chip sectors even as high-end production faces restrictions.
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Ending dollar dominance
During his recent visit to China, Brazilian President Lula calls for an end to dollar dominance in trade transaction, reports the Financial Times. The RMB can’t replace the dollar until China loosens capital controls, notes Shang-Jin Wei in Project Syndicate. Carla Norloff, writing in Foreign Affairs, explains why the dollar still dominates.
Mentioned publications
Brazilian President Lula, visiting China, calls for developing countries to trade in their own currencies.
The RMB can’t replace the dollar without loosening capital controls.
Will geopolitical divides undermine the dollar’s dominance?