China’s CNOOC Receives First Yuan-Denominated LNG Cargo

 

China’s CNOOC, the country’s largest offshore oil and gas producer, has received the first cargo of liquefied natural gas (LNG) that it paid for in Chinese yuan. The deal, which was struck with the United Arab Emirates, is a sign of the growing use of the yuan in international trade.

The yuan has been gaining ground as a global currency in recent years, and the Russia-Ukraine war has accelerated this trend. The West’s decision to cut Russia out of the SWIFT financial messaging system has made countries more wary of relying on the U.S. dollar for trade.

The use of the yuan in international trade has a number of benefits for both China and its trading partners. For China, it reduces its reliance on the dollar, which gives it more control over its own monetary policy. For its trading partners, it reduces the risk of being exposed to U.S. sanctions.

The use of the yuan in international trade is still in its early stages, but it is growing rapidly. The CNOOC deal is a sign that the yuan is becoming a more mainstream currency for global trade.

Benefits of Using the Yuan in International Trade

There are a number of benefits for both China and its trading partners to using the yuan in international trade. For China, it reduces its reliance on the dollar, which gives it more control over its own monetary policy. For its trading partners, it reduces the risk of being exposed to U.S. sanctions.

Reduced Reliance on the Dollar

The United States dollar is the world’s reserve currency, which means that it is the most widely used currency in international trade. This gives the United States a great deal of power over the global economy. For example, the United States can use its control over the dollar to impose sanctions on other countries.

By using the yuan in international trade, China can reduce its reliance on the dollar. This gives China more control over its own monetary policy and makes it less vulnerable to U.S. sanctions.

Reduced Risk of U.S. Sanctions

The United States has a long history of using sanctions to punish countries that it sees as its enemies. These sanctions can have a devastating impact on the economies of targeted countries.

By using the yuan in international trade, China’s trading partners can reduce the risk of being exposed to U.S. sanctions. This is because the yuan is not subject to the same level of U.S. control as the dollar.

Conclusion

The use of the yuan in international trade is growing rapidly. This is due to a number of factors, including the Russia-Ukraine war and China’s desire to reduce its reliance on the dollar. The use of the yuan in international trade is beneficial for both China and its trading partners. It reduces China’s reliance on the dollar, which gives it more control over its own monetary policy. It also reduces the risk of its trading partners being exposed to U.S. sanctions.