[kasey_junk]

You can’t largely. At least not with offshore yuan. To do that you have to go through the controlled settlement channels to get onshore yuan. That’s tightly controlled to protect the peg.

So no one is going to use a controlled currency for a hard liquid commodity. So if China wants petro yuan they have to liberalize that, which will break their peg.

China could have more international trade in the yuan before all of Americas recent misadventures. But that has cast consequences for their economy, and possibly the ruling elites power structures.

[fakedang]

Saudi Arabia was literally negotiating with China for payments in yuan for petroleum way before the war started, in 2023. The Gulf countries' largest trading partner is China - such a transaction is effectively a barter enabling programme. Russia and now Iran already accept yuan.

The mainland vs offshore renminbi restrictions disappear in Hong Kong, Singapore, etc. where most mainland Chinese trading companies and otherwise have offices anyways. Trading offshore to onshore renminbi becomes their problem, one that they are fairly accustomed to.

[kasey_junk]

The negotiations were literally about how to manage the currency risk to Riyadh. And none of the offshore trading houses are handling the currency transactions at the size necessary to handle large oil transactions.

This is as near an iron law as there is economics, you can’t keep a peg and have a large trade in a large liquid commodity market. China is trying to slowly thread this needle and they can get away with it with Iran and Russia because they are approaching vassal status because the petrodollars are closed to them. Everyone in the world can see this and wants to avoid it.

If you are an oil producer what you want is to diversify your currency risk. Right now China is _preventing_ this, because there is no way for them to become a major player in that market without huge impact on their economy and probably their political system.

[smartbit]

Very interesting, 2 different yuan’s!

  - offshore yuan
  - onshore yuan 

Do you have more details on this? A book, a blog, an article?

[kasey_junk]

Do a google search for “cnh vs cny forex”