Well-known Chinese news site Sohu recently reported that, based on what sources told Reuters, China may have taken the initial steps to use its own currency to pay for imported oil. Some actions may be taken as early as the second half of this year. This is a critical step on the path to RMB internationalization. The Chinese authorities have informally notified multiple financial organizations to get ready for oil transactions to be priced in Chinese yuan. China is now the world’s second largest oil consumer. In 2017, China surpassed the United States to become world’s largest oil importer. China’s demand for oil is now an important factor that determines the global price of oil. Based on the current plan, Russia and Angola could be the first two “trial sources” for China to pay in RMB. The two countries are both key suppliers for China, and both of them want to avoid settling in U.S. dollar as well. If this plan succeeds, the same rules can apply to the transactions for other natural resource imports.
Source: Sohu, March 29, 2018