On March 29th, China and Brazil officially reached an agreement that local currency can be used for settlement in foreign trade. According to the agreement, when the two countries conduct trade, they can use local currency for settlement, that is, the Chinese yuan and the real can be directly exchanged, and the US dollar is no longer necessarily used as the intermediate currency. In addition, this agreement is not mandatory and can still be settled in US dollars during the trading process.

The news immediately caused an uproar, and China’s “de dollarization” process took another step forward. So the problem is, after the agreement is reached, China Paper Information Network believes that the agreement will have the following impact on China’s import of pulp.

Firstly, if the trade between China and Pakistan is not settled in US dollars, not only will it not be constrained by the US, but it will also avoid being “harvested” by the US dollar!

Secondly, the import and export business is long-term affected by exchange rates, and this agreement reduces dependence on the US dollar, which can to some extent avoid external financial risks, especially exchange rate risks.

Furthermore, using local currency settlement between China and Pakistan will inevitably reduce the costs of pulp companies, thereby promoting the convenience of bilateral pulp trading.

Finally, this agreement has a certain Spillover effect. You should know that Brazil is the largest economy in Latin America, which provides a model for other Latin American countries, and perhaps they will also consider signing relevant agreements with China as a result. This not only enhances the influence of the RMB in the region, but also benefits the pulp trade between China and Latin America.