China has dramatically increased use of the yuan to buy Russian commodities over the past year, with nearly all of its purchases of oil, coal and some metals from its neighbor now settled in the Chinese currency instead of dollars, said multiple trading executives with direct knowledge of the matter.
The switch to yuan to pay for much of a roughly $88 billion commodities trade in the wake of the Ukraine war accelerates China's efforts to internationalize its currency, at the expense of the dollar, although strict capital controls are expected to limit its global role in the near term.
In March, the yuan — also known as the renminbi — became the most widely-used currency for cross-border transactions in China, overtaking the dollar for the first time, official data showed, although its share as a global payments currency remains small at 2.5%, according to SWIFT, compared with 39.4% for the dollar and 35.8% for the euro.