BRIC summit to push currency swap & FTA

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China, Russia, India and Brazil will focus on pushing a currency swap and free trade agreement at the BRIC summit. Analysts say the move will boost economic and trade exchange.

China is the world's largest importer of staple commodities. Russia boasts rich crude oil and natural gas resources, while Brazil and India are both major suppliers of iron ore to China. Meanwhile, Russia, Brazil and India have strong demand for machinery products from China. Trade volume between China and the other three countries has been growing at a rate of over 20 percent in recent years. For example, the trade volume between China and India was less than 25 billion US dollars in 2006, but swiftly rose above 50 billion US dollars in 2008.

Zhang Yansheng, director of Foreign Economic Research Dept., NDRC, said, "The economies of our four countries can greatly compliment each other. If China can reach free trade agreements with Russia, Brazil, and India, the exchange of commodities, services, and talent between us will become more convenient and frequent. We will reap more benefit from the economic and trade exchange."

Agreeing to a currency swap would avoid losses from any fluctuation of the US dollar. The greenback has depreciated by 10 percent in the past month. This has increased costs for foreign trade enterprises. A currency swap would allow trade to be settled in Chinese yuan. China already has a currency swap arrangement with Brazil and is in discussions with two other countries.