Pakistan, China Ditch US Dollar for Yuan in Bilateral Trade
- Pakistan, China Ditch US Dollar for Yuan in Bilateral Trade
The world’s second-largest economy, China has been largely dominating in its economic relations with Islamabad, with Chinese exports making up 87 percent of the trade.
Pakistan and China have agreed to walk away from the US dollar in bilateral relations and do trade in yuan, Islamabad announced on Tuesday. “China and Pakistan agreed to start trading in the yuan instead of the dollar,” Information Minister Fawad Chaudry told the media in Islamabad, as quoted by the Turkish Anadolu Agency.
According to Chaudry, the agreement will help Islamabad save up its US-dollar-denominated assets, given the massive 87-percent trade deficit with China (The Financial Daily estimates it to be $12.66 billion).
Ditching the American currency would also mean Islamabad and China using yuan in transactions within the China-Pakistan Economic Corridor, a $60 billion-worth infrastructure project funded by China that aims to boost the region’s integrity by connecting the Pakistani port city of Gwadar and the Xinjiang Uyghur Autonomous Region via a network of transportation routes.