China and Russia may have more of their business transactions settled in their own currencies as bilateral trade increases and both face rising hostility from the United States.

Russian President Vladimir Putin said last week at the Russia Calling

in Moscow that he hopes to see more settlement of transactions between China and Russia in renminbi or rubles.

He said the coordination of the Eurasian Economic Union, a Russian initiative, and the Belt and Road Initiative, a Chinese proposal is underway, along with the talks for agreement about currency.

"We operate on the premise that we will follow this path and work with our Chinese friends to integrate the ambitious Chinese Belt and Road economic project with the Eurasian Economic Union. We have created corresponding mechanisms in order to work together at the expert level," he said.

Wang Yanzhi, executive director of the Silk Road Fund, suggested that renminbi be used as a swap against the dollar by China and Russia.

He said both China and Russia are well aware of the risks of dollar dependence on their ability to grow their economies and trade with other nations because of the hostile approach taken by the US toward the two countries.

Renminbi became the first emerging market currency to be included in the International Monetary Fund's special drawing rights basket in 2016. The currency has since been used more frequently, and significant trading volume between China and the rest of the world makes it the natural choice in cross-border trade and investment settlement.

Full of potential

Whether or how to accept renminbi as a form of payment and investment has been a long and unanswered question for both governments, Wang said, adding that business relations between Russia and China were deepening, but financial connections between the two were lagging.

"It would be easier if we could invest directly with renminbi," he said. "The local banks or financial institutions can undertake the renminbi-ruble exchange to make it easier."

The Silk Road Fund was set up to invest in projects related to the Belt and Road Initiative. The fund has around $30 billion invested.

Around 70 percent of those investments are equity positions, while Russia is the largest position in the fund because of its roughly 10 percent stake in the Yamal LNG project, a flagship China-Russia investment project.

"I remember last year Putin said that 'We are not aiming to ditch the dollar, but the dollar is ditching us'," Wang said, adding that Chinese markets are opening up, making it easier for cross-border investment in their securities markets.

Vladimir Potapov, CEO of Russia's VTB Bank agreed. He said the financial cooperation between China and Russia is a field full of potential, as the two countries enjoy the highest level of bilateral relations in history.

renqi@chinadaily.com.cn