China is reportedly exploring the possibility of using yuan stablecoins for oil transactions, a move that could significantly advance the international use of its currency.

China National Petroleum Corporation (CNPC), one of the world’s largest energy companies, recently disclosed plans to begin a feasibility study on using stablecoins for cross-border settlements and payments.

CNPC Mentions Stablecoin Payments

According to Reuters, China’s State Council will discuss expanding the use of yuan stablecoins at the upcoming Shanghai Cooperation Organization (SCO) summit.

The Chinese government sees stablecoins as a promising tool for expanding the yuan’s global influence. The yuan accounts for just 2.88% of international payments on SWIFT, which is far behind the US dollar’s 47.19% share.

Oil payments have traditionally been the domain of a dominant global currency. If a significant payment channel like oil trade is secured, it could substantially boost the yuan’s share.

China has a history of using a “petroyuan” approach for oil trade, notably in its transactions with Russia. It essentially follows the precedent set by the US with the petrodollar. For example, by 2024, 90% of the trade between the two nations was settled in yuan and rubles, bypassing the dollar.

CNPC’s statement that it is closely monitoring the Hong Kong Monetary Authority’s stablecoin licensing trends could be interpreted as an intent to become a stablecoin issuer itself. If a top-tier energy company like CNPC utilizes stablecoins for cross-border transactions, settlement times and costs could be dramatically reduced.

The Chinese government has already begun dividing roles. Hong Kong is taking on the practical role of a hub, having already implemented

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Author: Paul Kim