China's vision of new multipolar order depends on yuan-based system, Oleg Deripaska says

A yuan-based payment system would be crucial to building the multipolar world China has been calling for, according to a Russian billionaire and close associate of President Vladimir Putin.

"A multipolar world will depend on how quickly China could develop a payment system, and it depends upon Chinese banks," Oleg Deripaska, the founder of Russian aluminium giant Rusal, said in Beijing on Wednesday.

"Chinese banks are too dependent upon dollar assets, and they are scared to death to take any risk, but this is reality in China."

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He said that to become a global power, China should also accelerate its efforts to expand a yuan-based debt market to boost international use of the Chinese currency in financial settlements.

"China has panda bonds, but panda bonds are very local. You need to have a global debt market," Deripaska said, referring to the yuan-denominated debt securities issued by overseas institutions operating in China. "China needs this for its trade."

Beijing started pushing to use the yuan as an alternative to the US dollar in international payments after the 2008 global financial crisis, and accelerated that drive to offset trade pressure from the United States that began in President Donald Trump's first term.

Russia's invasion of Ukraine in 2022 - and subsequent sanctions imposed by the US and Europe - have added to Beijing's concerns about its vulnerability to fallout from breaching US economic rules.

While Chinese leaders and officials have repeatedly called for international financial architecture to be overhauled, Beijing has seemed cautious about Russia's proposal to reform the global financial system and end the dominance of the US dollar.

To Russia, that was upsetting, according to Deripaska.

"These two main issues, we've been very upset that China [is] very slow on this, but now we kind of accept China will go its way slowly, not very fast."

Despite Beijing's push in recent years, the US dollar remains dominant, with the yuan accounting for just 2.88 per cent of global payments in July compared to the 48 per cent using the US dollar, according to data from the Society for Worldwide Interbank Financial Telecommunication (Swift) interbank messaging service.

Beijing has long pushed to use the yuan as an alternative to the dollar in international payments. Photo: Bloomberg alt=Beijing has long pushed to use the yuan as an alternative to the dollar in international payments. Photo: Bloomberg>

Story ContinuesDeripaska, who was sanctioned by the US in 2018, was in the Russian delegation travelling with Putin during his four-day state visit to China this week.

In Tianjin, Putin joined leaders of more than 20 countries at the two-day Shanghai Cooperation Organisation summit, where Chinese President Xi Jinping called for a more just and equitable global order. Many of the countries represented are from the Global South and are facing blanket sanctions and punitive tariffs from the US.

On Tuesday, China and Russia signed more than 20 agreements, covering sectors from energy and agriculture to education and aerospace. In Beijing a day later, Putin was standing next to Xi as the guest of honour at the massive military parade in Tiananmen Square showcasing China's growing military strength and diplomatic influence.

Deripaska, who also founded the green energy and metals company En+ Group, noted the significance of an agreement for advancing the long-anticipated Power of Siberia 2 pipeline.

"Logistics, power, gas. It's huge opportunity," he said.

According to Alexey Miller, the chief executive of Russian gas exporter Gazprom, the pipeline could deliver 50 billion cubic metres of gas a year from the Yamal Peninsula in the Russian Arctic to China through Mongolia.

Neither Gazprom nor China National Petroleum Corporation - partners in the pipeline project - has shared details about the agreement publicly.

In a meeting with Putin and Mongolian President Khurelsukh Ukhnaa in Beijing on Tuesday, Xi called for unity from the three countries to improve "political mutual trust" and fend off "external interference", especially at a time of global turbulence, according to a Chinese statement.

Deripaska said the three-way energy cooperation was in the interest of the three countries: it could help China tackle pollution challenges while Russia could secure reliable customers.

Mongolia, which he said might feel uneasy being sandwiched between China and Russia, could take the opportunity to push for a clean energy transition and improve its energy-relevant infrastructure.

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