"Causing great anxiety in Washington, Bolivia announces the use of RMB | Bolivia | Washington"
According to the Associated Press on July 28th, Bolivia has started using the renminbi in import and export transactions, becoming the latest South American country to frequently use the renminbi. This measure poses a minor but increasingly severe challenge to the hegemonic position of the US dollar in financial transactions in Latin America.
On July 27th, Bolivian Minister of Economy Marcelo Montenegro stated that from May to July this year, Bolivia conducted a total of 278 million yuan in financial transactions, accounting for 10% of the same period's foreign trade volume.
On June 29th, Bolivian President Ars é presided over the signing ceremony of the second batch of international cooperation agreements for the development of lithium resources at the Presidential Palace. Qinghai CITIC Guoan Technology Development Co., Ltd., a Chinese enterprise, became one of the winning companies.
He said at a press conference, "We are already using the Chinese yuan. This is a fact and a good start."
Montenegro also introduced that "exporters of banana, zinc, and wood manufacturing are trading in Chinese yuan, and importers of automobiles and production materials are also using Chinese yuan." Such electronic transactions are conducted through the United Bank of Bolivia.
Montenegro said, "The amount of RMB transactions is still relatively small, but it will continue to increase in the future."
According to reports, Bolivia has joined Brazil and Argentina as a result and started using the Chinese yuan. These three countries are currently governed by left-wing or center left governments.
The report cites Margaret Miles, director of the Asia and Latin America program at the Center for American Dialogue Studies, as saying that in the Latin American region, countries that increase the use of the renminbi are mainly those that "want to strengthen relations with China", and they often "unanimously hope to reduce their dependence on the US dollar" while "overall reducing their dependence on the United States".
The report further states that as trade and investment continue to increase, China's influence in Latin America is constantly strengthening.
Benjamin Gedan, Director of the Latin America Program at the Woodrow Wilson Center in the United States, said, "The special position of the US dollar in Latin America and other regions is under threat, which is causing great anxiety in Washington. China has taken on the new role of last resort for Argentina, and Bolivia has started using the renminbi in international trade. These events have become symbols of the development of the times."
According to reports, earlier this year, the Argentine government announced plans to use the Chinese yuan to purchase imported goods from China, in order to maintain its continuously decreasing foreign exchange reserves. Argentina also proposed the possibility of using the Chinese yuan to repay the debts of the International Monetary Fund.
By the end of 2022, the Chinese yuan had surpassed the euro, becoming the second largest currency in Brazil's foreign exchange reserves. 5.37% of Brazil's foreign exchange reserves are in Chinese yuan, while the euro only accounts for 4.74%.
The report also stated that before starting to use the renminbi, Bolivia had been plagued by a severe shortage of the US dollar since February, and its national economy had been hit.
Rebecca Ray, a senior researcher at the Global Development Policy Research Center at Boston University in the United States, believes that besides political considerations, finding a substitute for the US dollar also has economic significance because the Federal Reserve's interest rate hike has led to a surge in the US dollar exchange rate.
Bolivian President Luis Ars é stated in July that Bolivia was seeking alternative solutions when facing a "dollar liquidity crisis".
In April this year, Brazilian President Luis Inacio Lula da Silva questioned the ubiquitous presence of the US dollar in international trade during his visit to China.
Lula said, "After the disappearance of the gold standard, who decided that the US dollar would rise?"
