Bolivia replaces US dollar with Chinese yuan in foreign trade
Bolivia has started using the yuan, the currency of China, for its international payments for the import and export of goods, joining Brazil and Argentina in a small but growing challenge to use the Chinese currency against the hegemony of the US dollar.
Marcelo Montenegro, Minister of Economy of Bolivia, announced on Thursday that his country's financial operations relying on the Chinese yuan during the months of May to July this year amounted to 278 million yuan ($38.7 million), which is 10% of the country's foreign trade during that period.
“We’re already using the yuan. It’s a reality and a good start,” Montenegro said during a news conference. “Banana, zinc, and wood manufacturing exporters are conducting transactions in yuan, as well as importers of vehicles and capital goods.” These electronic transactions are carried out through the state-owned Banco Unión.
He added that although the amount of yuan used is still relatively small, it will increase over time.
Yuan use is growing in the Latin American and Caribbean region, especially among countries seeking to build a stronger relationship with China, according to Margaret Myers, director of the Asia and Latin America program at the Inter-American Dialogue, a think tank based in Washington, DC.
Benjamin Gedan, director of the Latin America program at the Washington-based Wilson Center, also said: “There is a lot of anxiety in Washington about threats to the special role of the dollar in regions like Latin America.”
“China’s new role as a lender of last resort in Argentina, and the use of the yuan for international trade by Bolivia, are a sign of the times,” he added.
Earlier this year, Argentina's government unveiled a plan to use the yuan to pay for imports from China as a way to shore up its dwindling foreign exchange reserves and even hinted that it might default on its debt to the International Monetary Fund using Chinese Yuan.
In Brazil, at the end of 2022, the yuan surpassed the Euro as the second most important currency in foreign reserves. At that time, 5.37% of the assets of the central bank of the country were in Chinese currency and 4.74% were in Euro.
Now in Bolivia, after months of severe shortage of dollars, the use of yuan begins.
ME
