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 and operated a stablecoin regulatory system.
Mixed Reactions In China: Hopes and Doubts on Stablecoins
Public reactions within China also show strong support for the idea. On social media, some commentators called the yuan stablecoin “good news.” They suggested it could create a cleaner money channel for ordinary Chinese people expand the offshore yuan market.
Analysts emphasized its potential role in Belt and Road trade and as a strategic response to the US dollar’s dominance in global stablecoins. These welcoming voices underlined hopes that stablecoins could strengthen China’s financial influence abroad.
At the same time, not everyone in China is fully convinced about embracing stablecoins. Former PBoC Governor Zhou Xiaochuan has issued strong warnings, arguing that stablecoin circulation could lead to “currency over-issuance” without full reserves and amplify risks through leverage.
He also questioned whether tokenized systems could realistically replace traditional account-based payments. Zhou warned against speculative misuse and potential threats to China’s capital controls. His remarks highlight a cautious undercurrent within Beijing, even as policy advisers push for greater use of digital currencies.
Meanwhile, a digital yuan international operations center is being established in Shanghai. Key regulatory bodies, including the People’s Bank of China (PBOC), are set to be assigned specific implementation tasks. The competition between the US and China to issue stablecoins is expected to intensify.
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