Bolivia Adopts Yuan for Trade

Bolivia Adopts Yuan for Trade
A rusted medallion above New York City's Avenue of the Americas, symbolizing Bolivia's ties with the U.S., shows its age. The South American country now seems to be warming up to China. Photo credit: Dan Macy

The Lede: Bolivia has now adopted the yuan as its currency for both imports and exports, joining the ranks as the third South American country to make this transition. The shift away from the conventional dollar-centered trade aligns with China's ongoing efforts to establish the yuan's position on the international platform.

What we know:

  • Economy Minister Marcelo Montenegro reported at the end of last month that Bolivia engaged in financial transactions totaling 278 million Chinese yuan ($38.7 million) between May and July of this year. This sum represents approximately 10% of the country's foreign trade during that specific timeframe, TIME magazine reported.
  • Bolivian exporters dealing in bananas, zinc, and wood manufacturing, along with importers of vehicles and capital goods, are now executing transactions using the yuan currency through the state-owned Banco Unión, Montenegro said earlier.
  • According to Reuters, importers and exporters have been trading in Russian ruble as well since March this year. Despite economic sanctions imposed on Moscow by Western nations since the start of the war in Ukraine, Russia's ambassador to Bolivia, Mikhail Ledenev, has emphasized that the transactions between Banco Unión and Russia's Gazprombank are effectively facilitating "the operations of Russian firms in the market."

The background: The shift to Chinese currency comes after a period of extensive dollar scarcity that has been adversely affecting Bolivia’s economy since February. That’s partly due to the decline in production of natural gas, a crucial component of the country's exports. With a decrease in net foreign currency reserves to less than $4 billion from its peak at $15 billion in 2014, state finances are under pressure. This situation also poses a threat to Bolivia's well-maintained currency peg with the dollar, Reuters reported earlier in June and may signal a shift from its economic upswing. During this period, the country enjoyed robust growth, impressive export figures, minimal inflation, a stable exchange rate, and subsidized gasoline. After the boom in commodity prices ended in 2014, Bolivia used its savings effectively for a few more years. But now, partly due to the impact of the COVID-19 pandemic, the country is running low on reserves, according to the Associated Press (AP).

Meanwhile China has increased its footprint in Bolivia, becoming one of its largest economic partners. Toward the end of January, Bolivia's administration under Luis Arce entered into a $1 billion deal with Chinese enterprises along with Bolivia's state-owned company for the purpose of investigating lithium reserves within the South American country. Lithium is used in a range of ion-battery items, spanning from electronic gadgets to components for electric vehicles.

Bolivia is by far not the first South American country to change the course towards yuan. Earlier this year Argentina started using the yuan for Chinese imports in an effort to rebuild its foreign currency reserves. Just recently the Argentine government has struck a deal with the People's Bank of China to acquire $1.7 billion in yuan using currency swaps. This move aims to fulfill its $2.7 billion payment commitments to the International Monetary Fund (IMF).

Leading the trend in spring, China and Brazil have formally established a trade agreement that involves direct transactions using their own currencies, bypassing the intermediary role of the U.S. dollar.

Likely outcomes/Takeaway:

  • Bolivia's adoption of the yuan marks a significant step in its economic trajectory, reflecting both the challenges it faces and its intent to diversify trade relationships.
  • The decision has the potential to influence Bolivia's economic stability, its relationships with major trading partners like China, and the broader context of South American nations moving away from traditional dollar-based trade.
  • It can also be seen as setting an example for other nations, particularly in South America, as they navigate a changing global economic landscape.
  • With Bolivia joining the trend, the yuan continues to grow momentum – slowly but steadily.


  • “The amount being used in yuan is still relatively small, but it will increase over time,” Economy Minister Marcelo Montenegro. "China has become the world's largest exporter. And in what currency would a large exporter want to receive everything it produces? Not in dollars, but in its own currency.”

Good Reads:

Bolivia Is Now Using China’s Yuan for Trade, Challenging Global Dominance of U.S. Dollar (TIME)

Chinese battery giant CATL seals $1.4 billion deal to develop Bolivia lithium (Reuters)

US dollar scarcity threatens Bolivia’s ‘economic miracle’ (Associated Press)