In a move that reflects the major shift in financial relations between Moscow and Beijing, Russia’s Ministry of Finance has issued its first-ever government bonds denominated in renminbi, worth 20 billion yuan (about $2.8 billion), according to a report by the Financial Times. The step comes as Russia seeks alternative funding sources for its war in Ukraine and aims to strengthen its financial ties with Chinese markets.
Details of the issuance
Russia sold 12 billion yuan in bonds maturing in 2029 with a 6% yield, and 8 billion yuan in bonds maturing in 2033 with a 7% yield. This issuance is the largest renminbi borrowing by a country outside China this year. Finance Minister Anton Siluanov said the offering establishes “a new sovereign benchmark” that will support future borrowing and deepen financial cooperation with China.
Local demand for the bonds
More than half of the bonds were purchased by Russian banks, which have increased their yuan holdings as trade with China grew after Western sanctions. This comes as part of a broader global trend toward borrowing in renminbi, with countries such as Hungary and Sharjah also issuing yuan-denominated bonds recently.
The yuan as Russia’s reserve currency
According to the Financial Times, the yuan has effectively become Russia’s new reserve currency after Western governments froze the Russian central bank’s assets in 2022 and blocked access to dollar and euro financing. This shift occurs amid economic stress in Russia, where inflation has reached 7% and interest rates exceed 16%, while oil and gas revenues remain under pressure from U.S. and European sanctions.
China’s stance and expert reactions
Geoeconomic analyst Maximilian Hess believes Russia’s yuan borrowing strengthens China’s confidence that Moscow supports Beijing’s efforts to internationalize the currency, suggesting that China likely gave a clear approval for the move.
International trend toward the renminbi
The report notes that countries like Indonesia and Pakistan are considering issuing bonds in China’s domestic market next year, while others—such as Russia—prefer issuing “Dim Sum Bonds” outside China. However, Russia had to offer higher yields compared to other issuers; for example, Kazakhstan’s Development Bank issued Dim Sum Bonds this year at just 3.3%.
Several countries, including Kenya, Angola, and Sri Lanka, have also converted parts of their dollar debts into renminbi during 2025.
Trade imbalance between Russia and China
China recorded an unusual trade deficit with Russia this year after Moscow imposed tariffs on cheap Chinese cars, while continuing to export large volumes of oil, coal, and fuel to China. China bought nearly half of Russia’s oil exports since late 2022, including about $7 billion worth in October alone. Meanwhile, $50 billion of Russia’s National Wealth Fund assets are now denominated in renminbi.
Borrowing outlook for Russian companies
The new government issuance opens the door for Russian companies to borrow in yuan at lower costs than borrowing in rubles, which has become increasingly expensive. Aluminum producer Rusal was the first Russian company to issue “Panda Bonds” in 2017 and later returned to yuan borrowing inside Russia after 2022.
Experts believe that yuan borrowing in Russia could one day become as large as dollar borrowing once was, if current trends continue.
