Additionally, Xi invited Putin to China for this year’s Belt and Road Forum, both Xinhua and Russia’s Sputnik news agency reported.

Russia and China have long decried the inordinate strength of the US dollar – the de facto global currency – and the leverage it gives Washington to flex its muscles well beyond the confines of finance.

The power of the US currency in international affairs has been particularly notable since Russia invaded Ukraine 13 months ago. It has allowed Western allies to restrict dollar-based trade in vital goods to Moscow as well as dent the lavish global lifestyles of Russian oligarchs with their London mansions and super yachts.

The threat of dollar-based sanctions has also proved a check on Beijing’s policies, encouraging it to stop short of providing military support to Russia, its “no limits” partner, even as China lends assistance diplomatically and through oil purchases.

China is wary of the financial damage a trade embargo and financial restrictions could exact on an economy already struggling under the weight of the pandemic, a real estate meltdown, soaring local debt and high youth unemployment.

What is the trade, investment relationship between China and Russia?

Putin noted that two-thirds of the trade between Russia and China is already in roubles and yuan, though analysts said much of that is largely in response to Western sanctions.

At the start of 2022, more than 50 per cent of Russian export settlements were in US dollar, a figure that fell to around 35 per cent by September as the war dragged on, according to the Central Bank of Russia.

Chinese companies and officials have also felt the dollar’s sting as Washington has ratcheted up financial and travel sanctions in response to Beijing’s Hong Kong and Xinjiang policies.

“Both sides opposed any unilateral sanctions without authorisation from the United Nations Security Council,” the two leaders said Tuesday in a joint statement.

This mirrored language in China’s recent 12-point peace plan for the Russia-Ukraine conflict that decried Washington’s “Cold War mentality and unilateral sanctions”.

Beijing has tried for years to chip away at the US dollar’s clout, hoping to supplant it with the yuan – including most recently with the introduction of a digital yuan.

But China’s controlled currency, limited financial transparency, statistical irregularities and political risks have undermined faith in the yuan as a replacement store of value.

Key attributes of a widely used global currency include liquidity, traceability and the limited risk of arbitrary restrictions in the event of a crisis.

According to the International Monetary Fund, during the third quarter of 2022, the US dollar made up 60 per cent of official allocated foreign reserves worldwide, compared with 20 per cent for the euro and 3 per cent for the yuan.

Putin tells Xi that Russia is ‘a bit envious’ of China’s development

In 2020, Morgan Stanley predicted that the yuan could account for 5 to 10 per cent of global foreign exchange reserve assets by 2030.

Earlier on Tuesday, Xi told Russian Prime Minister Mikhail Mishustin that he had extended the invitation to Putin to attend the Belt and Road Forum.

The trip would be Putin’s first visit to China since the start of the Beijing Olympics in February 2022, three weeks before Russia invaded Ukraine. The two leaders have met 40 times over the years.

“Our relationship has withstood the challenge of turbulent times,” Xi told Mishustin in televised remarks.

In their economic road map released on Tuesday, the two sides prioritised eight areas: developing e-commerce and integrated logistics systems while improving financial cooperation, energy and technology ties, industrial cooperation and food security.

The leaders also pledged to improve cooperation in the regions surrounding their shared 4,300km (nearly 2,700 miles) border. In the past, Russia has been concerned that its sparsely populated far east could come under the sway of China’s large, economically vibrant population.

They also vowed to “significantly increase the trade volume between the two countries by 2030”.

Two-way trade in 2022 rose 34.3 per cent to a record high of 1.28 trillion yuan (US$189.5 billion). Chinese and Russian leaders have set a joint goal of US$200 billion by 2024.

Russia’s economy has grown increasingly reliant on China. Russian imports from China rose 20 per cent during the first two months of 2023 compared with the same period last year, even as China’s imports of discounted Russian oil have softened the impact of Western sanctions that banned and set a price cap on oil products.

“We will make more contributions to safeguarding global food security, energy security, and the stability of industrial and supply chains,” Xi said at a news conference with Putin in Moscow on Tuesday, “and jointly promote the building of a community with a shared future for humanity.”

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