China and Russia have said they will renounce the US dollar and use their domestic currencies in bilateral trade.

The announcement came as the leaders of both countries met in St. Petersburg to expand bilateral trade and energy-cooperation between the countries, according to an AFP report on Tuesday.

"We agreed to expand the possibilities for application of national currencies during trade and economic contacts," said Russian Prime Minister Vladimir Putin after holding talks with the Chinese premier Wen Jiabao.

However, the move is not aimed at challenging the dollar but to protect their economies, as the countries started exploring other options in the wake of the global financial crisis.

With Russian ruble already trading on the Chinese exchange, yuan trade in Moscow is expected to begin in early December.

The bilateral trade between the two countries is estimated to reach above $50 billion by the end of 2010, according to the Russian government. A major chunk of the trade is transacted in US dollars currently.

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