Bolivian Economy Minister, Marcelo Montenegro, speaks during a press conference in La Paz, Bolivia, July 27, 2023. (AFP)

Bolivia is increasingly using the Chinese yuan for imports and exports, marking itself as a regular user of the currency among other Latin American countries, the Times magazine reported on Friday.

In a three-month period, ranging from May to July, the country conducted 10% of its foreign trade in the Chinese currency, totaling 278 million yuan or $38.7 million, Bolivian Economy Minister Marcelo Montenegro said on Thursday.

"We are already using the yuan. It’s a reality and a good start," Montenegro told reporters.

"Banana, zinc, and wood manufacturing exporters are conducting transactions in yuan, as well as importers of vehicles and capital goods," where the state-woned Banco Unión is being utilized to complete the transactions.

The Minister said the amount of trade happening in yuan is relatively small, but it is expected to grow over time.

Bolivia now joins Argentina and Brazil in using the yuan for foreign trade, dealing another blow to the US dollar and Washington's economic influence in Latin America.

The use of the Chinese currency is growing especially "in those countries that are looking to establish stronger ties with China, that view themselves as in some way politically aligned on this particular objective on decreasing their overall reliance on the dollar and on the US in general," said Margaret Myres, director of the Asia and Latin America Program at the Inte-Amecian Dialogue, as quoted by Times.

US anxious over growing yuan trade

Benjamin Gedan, the director of the Latin America Program at the Wilson Center, says the US is anxious about the dwindling role of the dollar in regions such as Latin America.

"China’s new role as a lender of last resort in Argentina, and the use of the yuan for international trade by Bolivia, are a sign of the times," Gedan added.

Bolivia began to use the yuan after several months of severe dollar shortages that have had a negative effect on the country's economy.

Countries are increasingly searching for alternatives to the US dollar amid rising interest rates and inflation which have made the currency less accessible to countries of the Global South.

"They’re all facing the same global macroeconomic conditions, and the most important part of that is the US dollar is really expensive and hard to get a hold of. So there’s basically a global dollar shortage among current central banks," said Rebecca Ray, a senior academic researcher at the Boston University Global Development Policy Center. The expert said central banks all over the world are looking for alternatives to the US dollar.

Gedan adds that Beijing is ready to challenge the global dominance of the dollar, "both for practical and symbolic purposes."

According to the Wilson Center researcher, China has long sought to achieve this objective, explaining that the pivotal factor contributing to the realization of Beijing's ambitions is the unsustainable economic situation.

Yuan; a dependable alternative

The Global South is trending slowly but surely toward pushing the US dollar off its perch. The issue of finding alternative currency headlines most non-Western regional group meetings, as "third world" countries look to grab their financial independence amid a turbulent international financial crisis.

The BRICS+ group has led the discourse for creating a new currency that would work as an alternative to the US dollar, however, no concrete mechanism has yet been established.

For now, the world's second-largest economy has presented its currency as a viable alternative to several countries, including the UAE, Argentina, India, Russia, Brazil, and Bolivia, all of which have completed some transactions using the yuan.

Argentina previously announced in late April that it will begin to pay for Chinese goods, which make up the largest section of the country's imports, with the yuan rather than the US dollar.

The country has paid around $790 million per month in yuan for imports since April's announcement.

The country's Minister of Economy, Sergio Massa, asserted that "Argentina must keep its foreign reserves robust" after the worst drought in history.

"Argentina has a currency swap with China that works not only as an instrument to strengthen its [foreign currency] reserves but also as a financial and commercial instrument,” he stated.

Moreover, Buenos Aires used $1.1 billion in yuan from a recently extended and expanded swap line with China to complete the June payment to the International Monetary Fund (IMF), as the country struggles to pay back the Western-based financial agency.