Summary
China, Japan, and South Korea held their first trade talks in 5 years in Seoul, agreeing to deepen cooperation amid looming U.S. tariffs announced by Donald Trump.
With a 25% tariff on car imports threatening their export-heavy economies, the three nations pledged to advance negotiations on a trilateral free trade agreement and strengthen the RCEP.
South Korea’s trade minister emphasized joint action against global economic fragmentation.
The meeting marks a renewed push for regional trade unity as tensions with the U.S. grow. The next meeting will be held in Japan.
At the end of the day, it costs more from an accounting standpoint to constantly swap currencies. It’s easier and more cost effective to buy when the most widely used currency is more in your favor and use that to trade with allies. China doesn’t really have as much of a say in how others conduct trade in BRICS. They would need to add a clause abolishing the use of their currency for trades that do not include China.
You are right in a sense. For example, Russia literally forced that situation. However, there simply isn’t enough RMB globally for it to work. China would have to take on a lot more debt for that amount to be possible. China can choose not to as they’ve consistently shown. However, if globally the world decides in unison to ignore this, they’ll deflate the Chinese yuan considerably forcing China to take on the debt. In many ways that’s already happening to China’s chagrin. However, I believe since China really doesn’t want this they’ll figure out a way to enforce currency swaps. I could be wrong obviously, but that’s clearly the direction China wants to go.