China’s CNPC Explores Stablecoin Use in Oil Trade: A Strategic Shift in Yuan Globalization

China’s CNPC has embarked on a transformative feasibility study to explore the use of stablecoins for cross-border oil trade settlements, marking a pivotal step in the yuan’s globalization strategy. This initiative, aligned with Hong Kong’s regulatory advancements and Beijing’s broader economic ambitions, could redefine the dynamics of international energy trade while challenging the U.S. dollar’s entrenched dominance. For investors, the emergence of yuan-backed stablecoins presents both opportunities and risks, warranting a nuanced analysis of their technical, regulatory, and geopolitical implications.

Strategic Shift: From Petroyuan to Stablecoin-Driven Trade

CNPC’s exploration of stablecoins is part of a larger effort to accelerate the yuan’s international adoption. By leveraging stablecoins—digital tokens pegged to fiat currencies—China aims to reduce transaction costs, enhance settlement efficiency, and bypass traditional dollar-based systems like SWIFT. This mirrors the “petroyuan” model, where 90% of Sino-Russian trade was settled in yuan and rubles by 2024 [1]. However, stablecoins offer a new dimension: programmable, real-time settlements that could streamline energy trade in Belt and Road Initiative (BRI) corridors.

Hong Kong’s Stablecoins Ordinance, effective August 1, 2025, provides a critical framework for this transition. The ordinance mandates 100% reserve backing for stablecoins, real-time transaction monitoring, and licensing requirements, creating a controlled environment for experimentation [2]. CNPC’s interest in this framework signals a strategic alignment with Hong Kong’s role as a bridge between China’s capital controls and global markets.

Technical Infrastructure and Market Potential

The technical underpinnings of yuan-backed stablecoins are equally compelling. Platforms like Conflux 3.0, a blockchain supporting 15,000 transactions per second (TPS), are being integrated to facilitate high-volume cross-border settlements. For instance, the AxCNH stablecoin, backed by offshore yuan, has already secured regulatory approval in Kazakhstan and is being tested for energy trade applications [3]. These systems leverage permissioned blockchains with geofencing and sector-specific spending limits, ensuring compliance with China’s capital controls while enabling programmable finance.

Market projections suggest the yuan-backed stablecoin sector could grow to $2 trillion by 2028, driven by BRI expansion and corporate adoption [4]. PetroChina’s pilot projects in Shenzhen, which processed over 100,000 stablecoin transactions daily, demonstrate the scalability of these systems [3]. For investors, this represents a high-growth niche within the broader stablecoin market, which is forecasted to reach $2 trillion by 2028 [4].

Risks and Regulatory Challenges

Despite the optimism, challenges persist. Former PBOC Governor Zhou Xiaochuan has warned of risks such as currency over-issuance and speculative misuse, emphasizing the need for robust oversight [1]. Additionally, China’s strict capital controls and the yuan’s limited global adoption remain structural hurdles. While Hong Kong’s regulatory sandbox mitigates some of these risks, international skepticism about the transparency of Chinese economic data could hinder broader adoption.

Geopolitical Implications and Future Outlook

The geopolitical stakes are significant. By promoting yuan-backed stablecoins, China seeks to reduce reliance on dollar-dominated infrastructure and position itself as a leader in digital finance. This aligns with the Cross-Border Interbank Payment System (CIPS), which is being integrated with stablecoins to create a scalable alternative to SWIFT [5]. The upcoming Shanghai Cooperation Organisation (SCO) Summit is expected to highlight these efforts, particularly in BRI regions where yuan-backed stablecoins could facilitate infrastructure financing and trade.

For investors, the key question is whether these initiatives can overcome regulatory and trust barriers. While the PBOC’s cautious approach prioritizes stability, the involvement of tech firms like Ant Group and JD .com suggests a growing ecosystem of innovation. As CNPC and PetroChina advance their pilots, the success of yuan-backed stablecoins will hinge on their ability to demonstrate efficiency, compliance, and resilience in real-world trade scenarios.

Conclusion

China’s foray into stablecoin-driven oil trade represents a bold experiment in financial innovation and geopolitical strategy. For investors, the yuan-backed stablecoin market offers a unique opportunity to participate in the yuan’s global ascent, provided they navigate the regulatory and technical complexities. As Hong Kong and Shanghai emerge as hubs for this ecosystem, the coming years will test whether stablecoins can truly reshape cross-border energy settlements—and, by extension, the global financial order.

Source:
[1] China Is One Step Further Into Yuan Stablecoin: Oil Trade
[2] Hong Kong's Stablecoin Push Drives CNPC's Digital Payments Gamble
[3] China's CNPC Starts Feasibility Study on Stablecoin Cross-Border Payments
[4] China's Strategic Push for Yuan-Backed Stablecoins in Global Trade
[5] China Weighs Yuan Stablecoins to Challenge Dollar Dominance in Global Trade [https://www.bitget.com/news/detail/12560604938941]