China’s President Xi Jinping unveiled an ambitious plan to challenge the petro-dollar by launching the electro-yuan to settle energy trades. The concept aims to promote the use of the Chinese yuan for energy deals in Central Asia, starting with financing for wind and solar projects. The announcement of the electro-yuan was made during the SCO 2025 summit in China’s Tianjin this week.
The electro-yuan is yet to go live, and China has not provided a timeline for when the energy settlements begin. However, it is seen as a direct challenge to the US-led financial system, and China is planning to eat up its share. China is tapping the SCO alliance’s vast energy reserves to reshape how energy payments are settled. For the uninitiated, SCO members control around 20–25% of the world’s oil reserves.
In addition, the SCO members also hold a staggering 44–50% of global natural gas reserves. They also control roughly 35–40% of coal reserves worldwide. They possess around 50% of the world’s known uranium reserves. This makes the electro-yuan a perfectly suited payment method in the Central Asian region, challenging the US-dominated system. The energy sector in SCO countries is brimming, and China is leveraging the opportunity, pushing the Chinese yuan.
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Electro-Yuan For Energy Trade Settlements Is a Big Win For China
Apart from planning to create a new SCO Bank, the electro-yuan settlements for energy trades are a big win for China. The Xi Jinping administration is also pledging to invest in the energy sector in SCO countries like Kazakhstan and Kyrgyzstan. China’s total trade turnover in Central Asia has grown 10.4% year-on-year, reaching a record $40 billion.
If the electro-yuan rolls out subsequently, China would be the most benefited from the ordeal. Xi Jinping is putting all the cards on the table to bolster China and the yuan in the changing economic landscape.
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