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UDPATE 1-Russia, China to boost rouble, yuan use in trade

Published 06/17/2009, 09:13 AM
Updated 06/17/2009, 09:17 AM
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* Moscow, Beijing agree to boost rouble, yuan use in trade

* China overtakes Germany as Russia's top trade partner

* Call for IMF reform, bigger emerging economies role

By Toni Vorobyova

(Adds background, quotes)

MOSCOW, June 17 (Reuters) - The presidents of Russia and China on Wednesday agreed to boost the use of their national currencies, the rouble and yuan, in bilateral trade.

"It is essential...to move forward the work on the creation of favourable conditions for widening the sphere of settlement in roubles and yuan," Russian President Dmitry Medvedev and Chinese President Hu Jintao said in a joint statement.

Russia, the holder of the world's third largest reserves after China and Japan, has repeatedly called for less global reliance on the U.S. dollar -- in which the bulk of the world's reserves are held and most global trade deals are made.

Moscow has said the rouble and the yuan could become global reserve units in the future, and also suggested the creating of a supranational reserve currency, possibly based on the International Monetary Fund's Special Drawing Rights.

China, which holds nearly $2 trillion in foreign currency reserves and does not want to see the value of its dollar assets go up in smoke, has not joined in the dollar criticism.

But with trade between Russian and China worth $10.7 billion dollars in the first four months of this year alone, greater use of national currencies could have an impact on the greenback.

At a joint news conference, Medvedev called bilateral trade in national currencies "an especially important task".

Data from the Economy Ministry showed that trade with China eased in the first four months of 2009 as Russia entered its first recession in a decade. But with other world economies also hit by the crisis, China became Russia's biggest trade partner, overtaking Germany and the Netherlands.

The trade relationship is set to grow further, as Russia will steeply raise oil exports to China from next year when it finishes building its first pipeline to Asia.

Medvedev said the total value of oil deals signed between the two countries was worth around $100 billion including $25 billion in loans China gave to Russian firms with the rest being the value of a 20-year oil supply contract.

On Wednesday, the two countries signed memorandums of cooperation on natural gas and coal, and pledged more joint activity in many areas including light industry, transport, agriculture and energy.

On the sidelines of the meeting, Russian Deputy Prime Minister Igor Sechin told reporters Moscow was continuing work into the possibility of pricing its main export oil in roubles.

Russia and China, in the joint statement, also called for reform of the IMF and the World Bank to "significantly increase the right of vote and representation of new developing markets and developing countries in the global financial structures". (Reporting by Toni Vorobyova; Editing by Victoria Main)

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