Chinese Steelmakers Using Blockchain to Break Dollar Dependence

Blockchain China

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Tim Alper

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Tim Alper

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Tim Alper is a British journalist and features writer who has worked at Cryptonews.com since 2018. He has written for media outlets such as the BBC, the Guardian, and Chosun Ilbo. He has also worked...

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June 26, 2023 06:55 EDT

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Chinese firms could look to end their dollar dependence in international trade deals using blockchain technology – with the nation’s steel industry looking to purchase raw materials in Chinese fiat RMB rather than the American greenback.

Per a report from China Economic Net, an increasing number of Chinese iron ore importers are turning to blockchain-powered cross-border platforms to conduct RMB trade deals, potentially doing away with USD, the usual currency of choice in international trading.

A new preponderance of blockchain-powered cross-border import and export platforms is allowing some of the world’s biggest iron ore miners to sell the material – the chief component of steel – directly to Chinese firms 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 international success of its forthcoming digital yuan rollout.

But in the meantime, a slew of cross-border trading platforms that make use of blockchain technology has also rolled out nationwide, allowing banks to finance deals faster and more effectively.

The media outlet says that the world’s three biggest iron ore miners – Brazilian firm Vale and Australian companies Rio Tinto and the BHP Group – have already 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.

And many 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 too.

The media outlet says that blockchain-powered letters of credit issuance has allowed 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 biggest steel producer by quite some way. Per World Steel data, Chinese steel production 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, also according to 2018 figures.