China’s Bank of China (BOC), one of the country’s largest state-owned commercial banks, has inaugurated its inaugural branch in Riyadh, Saudi Arabia. This strategic move is expected to facilitate the wider adoption of the Chinese yuan in both financial transactions and trade activities.
According to news agency SPA, Saudi’s cabinet approved BOC’s license to open a branch in the Kingdom.Â
New trend
Experts have noticed a trend among BRICS member countries. In addition, they are expediting the utilization of local currencies for settlements in cross-border trade. The objective is to decrease dependence on the U.S. dollar.
Moreover, according to these experts, the Chinese currency is playing an increasingly crucial role. It is facilitating trade and enhancing efficiency among BRICS nations.
Read more: BRICS Summit 2023: What you need to know
As per an announcement made by BOC, the bank inaugurated its Riyadh branch on Tuesday. The opening ceremony was attended by BOC President Liu Jin, Chinese Ambassador to Saudi Arabia Chen Weiqing, governor of the Saudi Central Bank Ayman Al-Sayari, and various other officials.
Liu expressed that the establishment of a branch in Saudi, aimed at facilitating trade and investment exchanges, represents a robust initiative to bolster the high-quality development of the Belt and Road Initiative through financial means.
Also, according to media reports, China, being the largest purchaser of Saudi Arabia’s crude oil, imported 87.5 million tons of crude oil from the country in 2022. This accounted for approximately 21.7 percent of Saudi Arabia’s total crude oil exports.
In addition, apart from Saudi Arabia, companies in Brazil have achieved notable advancements in utilizing the yuan for trade purposes.
Brazilian pulp shipment
As reported by The Rio Times, Eldorado Brasil, a Brazilian pulp company, successfully conducted its inaugural pulp shipment to China, using the yuan as the payment currency. Additionally, this move aims to explore new credit options in China, with support from the Bank of China (BOC) in facilitating this pilot initiative. On August 25, the shipment consisting of 43 containers was dispatched.
Furthermore, according to the expert, conducting trade settlements among BRICS countries has its benefits. Using local currencies or the yuan can help mitigate exchange-rate losses. Additionally, this approach has notable advantages. It enhances trade operational efficiency. Moreover, it serves as a preventive measure against the potential use of the U.S. dollar as a tool for sanctions.
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