China, Japan Eschew Dollar in International Trade

Well, it’s about time that the Chinese and Japanese figured out a way to avoid using the U.S. dollar to conduct trade. Granted, the dollar has been all too convenient for international trade since the end of World War II and, for the first few decades at least, we did a decent job of stewarding the world’s reserve currency through some difficult times, but, here in 2012, any major economy that still exchanges the local currency for dollars which are then converted into the local currency of their trading partner is just plain lazy.

This BBC report has all the details:

China will allow direct trading of the yuan and the Japanese yen, in a move aimed at promoting trade between Asia’s two biggest economies.

This means the two countries will not be using the US dollar as an intermediary.

China, which sometimes has a tense relationship with Japan, is the country’s biggest trading partner.

China’s central bank said the China Foreign Exchange Trade system would launch this trade, starting next month.

“This is part of China’s broader strategy to reduce dependence on the dollar,” said Dariusz Kowalczyk from Credit Agricole CIB in Hong Kong.

Surely, there are some non-trivial technical details involved here and, let’s face it, Japan and China haven’t always been best friends, but, still, it’s 2012 and anyone still opting for the convenience of using the U.S. dollar in international trade when they don’t really have to deserves what they get, U.S. hegemony-wise.