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Arms Sales: USA vs. Russia (1950-2017)

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Arms Sales: USA vs. Russia (1950-2017)

Between countless proxy wars and the growing threat of nuclear catastrophe, the Cold War created an unprecedented geopolitical climate.

For nearly half a century, the world’s two biggest superpowers were scrambling to top one another by any means necessary. It was a tension that ignited everything from the space race to sports rivalries, with the impact often spilling over to neighboring nations.

Not only did the U.S. and Soviet Union duke it out in the mother of all arms races – they also extended their influence by selling arms outside of their borders. Interestingly, this latter race continues on until today, almost three decades after the fall of the Iron Curtain.

Visualizing Arms Sales

Today’s animation comes from data scientist Will Geary, and it shows the history of international arms sales originating from the U.S. and the Soviet Union (later Russia) from 1950 to 2017.

More specifically, using data from the SIPRI Arms Transfers Database, the animation shows the geographic movement of arms from country to country as well as the evolving share of the arms trade held by the respective countries. The video is also pleasantly backed by audio that represents music from each decade, ranging from Buffalo Springfield to The Clash.

Peak Arms Dominance

If you watch the pie chart in the upper left corner of the animation, you’ll see that the early-1960s is the peak of U.S. and Soviet arm dominance – at this point, around the same time as the Cuban Missile Crisis and then the JFK assassination, the two superpowers combined for 80% of global arms sales.

In the 1960s, the biggest customers of U.S. arms were Germany, the United Kingdom, and Japan – while the Soviets sent the most weapons to Egypt, Poland, and East Germany.

Fall of the Wall

By the 1980s, the global arms trade started dying down as Soviet leaders like Gorbachev focused on domestic reforms, and eventually perestroika.

Later, the Soviet Union dissolved, and arms sales continued to plunge all the way to 2001:

Arms exports by year

Since then, arms sales have been ramping up again – and today, they are back at levels last seen before the Berlin Wall came down.

The Modern Era

Who is selling the most arms, according to the last 10 years of data?

Arms sales by country

Even though the Cold War is now long gone, the U.S. and Russia have kept their legacy of international arms sales going well into the 21st century.

And today, the two nations combine for roughly 60% of arms sales, with top U.S. weapons manufacturers like Lockheed Martin and Raytheon getting a big slice of that pie.

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Politics

The Start of De-Dollarization: China’s Gradual Move Away from the USD

The de-dollarization of China’s trade settlements has begun. What patterns do we see in USD and RMB use within China and globally?

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An area chart illustrating the de-dollarization of China’s trade settlements.

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The following content is sponsored by The Hinrich Foundation

The Start of De-Dollarization: China’s Move Away from the USD

Since 2010, the majority of China’s cross-border payments, like those of many countries, have been settled in U.S. dollars (USD). As of the first quarter of 2023, that’s no longer the case.

This graphic from the Hinrich Foundation, the second in a three-part series covering the future of trade, provides visual context to the growing use of the Chinese renminbi (RMB) in payments both domestically and globally.  

The De-Dollarization of China’s Cross-Border Transactions

This analysis uses Bloomberg data on the share of China’s payments and receipts in RMB, USD, and other currencies from 2010 to 2024. 

In the first few months of 2010, settlements in local currency accounted for less than 1.0% of China’s cross-border payments, compared to approximately 83.0% in USD. 

China has since closed that gap. In March 2023, the share of the RMB in China’s settlements surpassed the USD for the first time.

DateRenminbiU.S. DollarOther
March 20100.3%84.3%15.4%
March 20114.8%81.3%13.9%
March 201211.5%77.1%11.5%
March 201318.1%72.7%9.2%
March 201426.6%64.8%8.6%
March 201529.0%61.9%9.0%
March 201623.6%66.7%9.7%
March 201717.6%72.5%9.9%
March 201823.2%67.4%9.4%
March 201926.2%65.1%8.7%
March 202039.3%54.4%6.3%
March 202141.7%52.6%5.6%
March 202242.1%53.3%4.7%
March 202348.4%46.7%4.9%
March 202452.9%42.8%4.3%

Source: Bloomberg (2024)

Since then, the de-dollarization in Chinese international settlements has continued.  

As of March 2024, over half (52.9%) of Chinese payments were settled in RMB while 42.8% were settled in USD. This is double the share from five years previous. According to Goldman Sachs, foreigners’ increased willingness to trade assets denominated in RMB significantly contributed to de-dollarization in favor of China’s currency. Also, early last year, Brazil and Argentina announced that they would begin allowing trade settlements in RMB. 

Most Popular Currencies in Foreign Exchange (FX) Transactions

Globally, analysis from the Bank for International Settlements reveals that, in 2022, the USD remained the most-used currency for FX settlements. The euro and the Japanese yen came in second and third, respectively.

Currency20132022Change (pp)
U.S. Dollar87.0%88.5%+1.5
Euro33.4%30.5%-2.9
Yen23.0%16.7%-6.3
Pound Sterling11.8%12.9%+1.1
Renminbi2.2%7.0%+4.8
Other42.6%44.4%+1.8
Total200.0%200.0%

Source: BIS Triennial Central Bank Survey (2022). Because two currencies are involved in each transaction, the sum of the percentage shares of individual currencies totals 200% instead of 100%.

The Chinese renminbi, though accounting for a relatively small share of FX transactions, gained the most ground over the last decade. Meanwhile, the euro and the yen saw decreases in use. 

The Future of De-Dollarization

If the RMB’s global rise continues, the stranglehold of the USD on international trade could diminish over time.  

The impacts of declining dollar dominance are complex and uncertain, but they could range from the underperformance of U.S. financial assets to diminished power of Western sanctions.

However, though the prevalence of RMB in international payments could rise, a complete de-dollarization of the world economy in the near- or medium-term is unlikely. China’s strict capital controls that limit the availability of RMB outside the country, and the nation’s sputtering economic growth, are key reasons contributing to this.

The third piece in this series will explore Russia’s shifting trading patterns following its invasion of Ukraine.

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Visit the Hinrich Foundation to learn more about the future of geopolitical trade

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