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China and Russia May Be Making Plans Regarding a New Financial System

Aug. 20, 2018 (EIRNS)—In the Johannesburg BRICS summit on July 25-27, the five nations’ leaders discussed efforts to expand lending by the BRICS New Development Bank, support each other against currency speculation, and switch to the use of national currencies, rather than the dollar, in commerce among BRICS nations.

Subsequently, on Aug. 1, Zavtra published an interview with Russian presidential economic advisor Sergey Glazyev, in which he said that a task force of Chinese and Russian economists has drafted a joint report on the prospects for further Chinese-Russian economic cooperation. Glazyev said that report contains a consensus on several areas for action: lowering Chinese barriers to Russian imports, including grain; stopping use of the dollar in bilateral trade, in favor of national currencies and payments systems; the creation of new, joint specialized banks to finance trade and investment projects; the establishment of international consortiums for infrastructure construction; cooperation on building development corridors; and the promotion of joint ventures in high-tech manufacturing.

Notably, Glazyev told Zavtra that the report had already been submitted to Chinese and Russian officials.

The Russian advisor then included his view, that for Russia and China to integrate their financial systems, Russian economic policy will need to change toward China’s. He said that Russian policy follows International Monetary Fund recommendations, whereas China has created the most progressive system in the world for directing economic development and raising the general welfare through an increased volume and efficiency of production. India and countries in Southeast Asia have adopted elements of this approach, Glazyev said, and similar approaches are used by Japan and South Korea.

It could be added that China’s financial system is also regulated on the Glass-Steagall bank separation principle, as Russia’s is not; and that the Chinese government’s primary tool for “directing economic development” is the issuance of credit, not the manipulation of interest rates.

Nonetheless the existence of the report prepared for high-level officials, shows a potential for the countries to make moves with other nations toward a new financial system.

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