As one more measure to globalize its currency, China plans to offer loans to Bric nations. In a communiqué after a meeting in April in China; five nations’ delegates called for an international currency system.
An MOU between the China Development Bank and its Indian, Russian, Brazilian and South African counterparts is expected to be signed in New Delhi on March 29. As per agreement the China Development Bank will offer loans in renminbi. Finance ministry of South Africa and Brazil’s development bank have already expressed hope that an agreement will be concluded in New Delhi.
The step targets to increase trade among five countries and encourage use of renminbi instead of dollar for global trade. Although the dollar has strengthened recently, several governments think it will again weaken over the longer period and seek alternatives, besides euro. The China Development Bank has already extended a loan of $30 billion to the state company of Venezuela, Petróleos. Half of the loan will be repaid in oil from Venezuela to China.
Just below 13% of China’s Asia trade is conducted in renminbi. China’s share of regional trade might increase to 50% by 2015.
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