Australia wants to cut out US dollar in trade with China – Brazil, China sign currency swap ‎agreement

Australia wants to cut out US dollar in trade with China

By Ryan Villarreal
International Business Times

Australia is seeking to bypass trading in U.S. dollars with China in a deal that will be the focus of Prime Minister Julia Gillard’s trip to Beijing next week.

Trade with China, Australia’s primary trading partner, totaled $120 billion in the last fiscal year. China buys nearly one-third of Australian exports.

“The value of such a deal would be substantial for exporters to China, especially those that import a lot from China, like mining companies, as it would remove business constraints including exchange-rate risks and transaction costs,” said Australia’s former ambassador to China, Geoff Raby, according to the Australian.

The Australian government has made no secret of its aims to shift away trade from the U.S. dollar, the world’s primary reserve currency used in international commerce.

A government report titled, “Australia in the Asian Century,” discusses Canberra’s efforts to establish direct trading between the Australian dollar and the Chinese renminbi, or RMB, also referred to as the yuan. It also pushes for increasing the prominence of the RMB as a global reserve currency.

“We have held preliminary discussions with the Chinese government to explore how soon direct convertibility can be practicably achieved,” the October 2012 report reads. “We are continuing these discussions, and also exploring other opportunities to work with China to support the internationalization of the RMB.”

Canberra’s aims to build on a $30 billion currency-swap deal with China signed last year that makes funds available for business transactions between the two countries through their respective state-run banks.

The report described the deal as “one of the largest such swaps China has entered into.”
Gillard will meet with the recently elevated Chinese leaders, President Xi Jinping and Premier Li Keqiang, as she marks her first official visit to their country as prime minister and sets the tone for bilateral ties with Beijing.

Australia’s former prime minister and current foreign minister, Kevin Rudd, has already arrived in Beijing where he delivered an address on security issues in the Asia-Pacific region — ranging from cyberwarfare to North Korean nuclear threats — at the Chinese military’s National Defense University.

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Video: China, Brazil sign currency swap ‎agreement at 5th BRICS Summit in Durban, South Africa

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Video: Australia- Investment destination China

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Video: Australia’s relationship with China explained

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