China and Brazil have reached a deal to trade in their own currencies, ditching the U.S. dollar as an intermediary, the Brazilian government said Wednesday.
The deal will enable China, the world’s second-largest economy, and Brazil, the biggest economy in Latin America, to conduct their massive trade and financial transactions directly, exchanging yuan for reais and vice versa instead of going through the dollar.
“The expectation is that this will reduce costs… promote even greater bilateral trade and facilitate investment,” the Brazilian Trade and Investment Promotion Agency (ApexBrasil) said in a statement.
China is Brazil’s biggest trading partner, with a record $150.5 billion in bilateral trade last year.
The deal, which follows a preliminary agreement in January, was announced after a high-level China-Brazil business forum in Beijing.
Brazilian President Luiz Inacio Lula da Silva was originally scheduled to attend the forum as part of a high-profile China visit, but had to postpone his trip indefinitely Sunday after he came down with pneumonia.
The Industrial and Commercial Bank of China and Bank of Communications BBM will execute the transactions, officials said. China has similar currency deals with Russia, Pakistan and several other countries.
A Chinese defense ministry spokesperson said on Thursday that the Chinese military is willing to work with its Russian counterpart to further strengthen strategic communication and cooperation to maintain international and regional security and stability.
Senior Colonel Tan Kefei, spokesman for the Ministry of National Defense, made the remarks at a regular press conference.
Under the strategic guidance of the two heads of state, the strategic communication and practical cooperation between the two militaries have in recent years been brought to a new level and made new progress, Tan said.
Noting China-Russia ties are not similar to the military and political alliance during the Cold War, Tan said it is based on the principles of non-alliance, non-confrontation and non-targeting of third parties.
The Chinese military is willing to work with its Russian counterpart to further strengthen strategic communication and coordination, regularly organize joint maritime and air patrols and joint exercises and training, strengthen exchanges and cooperation between the two militaries and further deepen military mutual trust, Tan said.
The two militaries will jointly implement the China-proposed Global Security Initiative and safeguard international fairness and justice to further maintain international and regional security and stability and serve the building of a community with a shared future for mankind.
