Chinese firms could check at the end their dollar dependency in international deal utilizing blockchain technology – with the nation’s steel industry looking to obtain raw materials in Chinese fiat RMB rather than the American greenback.
As per the report from China Economic Net, a growing number of Chinese iron ore importers turn to blockchain-powered cross-border platforms to conduct RMB trade deals, potentially doing away with USD, the common currency of choice in international trading.
A modern dominance of blockchain-powered cross-border import and export platforms provides some of the world’s most significant iron ore miners to sell the metal – the chief component of steel – directly to Chinese corporations without the need for the American dollar.
Beijing has been keen to end its international trade firms’ dollar dependence and has high hopes for the global success of its forthcoming digital yuan rollout.
In the meantime, a slew of cross-border trading platforms that use blockchain technology has also rolled out nationwide, allowing banks to finance deals quicker and more efficiently.
The media source says that the world’s three largest iron ore miners – Brazilian firm Vale and Australian companies Rio Tinto and the BHP Group – have traded with large Chinese steelmakers in RMB this year.
Baosteel also sealed a blockchain-powered iron ore deal with BHP worth over USD 14 million back in June. Numerous miners have also begun spot trading small quantities of iron ore at Chinese ports in RMB deals – with some looking to adopt blockchain-powered solutions here.
The media outlet says that blockchain-powered letters of credit issuance have authorized banks to process payments faster than ever – meaning that even if many iron ore trade deals are still calculated in dollars, they can be settled in RMB as transaction and completion speeds have been sped up to the extent that they are now faster than ever, as well as almost or entirely paperless.
China is the world’s largest steel producer by quite some way. As per World Steel data, Chinese steel generation accounted for over 50% of the entire global market in 2018.
It is also the world’s biggest steel consumer – using 48% of the planet’s total steel output, even according to 2018 figures.