{"text":[[{"start":12.05,"text":"China’s drive to widen global use of the renminbi has been boosted by the Iran war, with adoption of Beijing’s cross-border payment system surging since the conflict erupted."}],[{"start":22.8,"text":"The average daily value of transactions settled through China’s cross-border interbank payment system (Cips) hit a record of Rmb920.5bn ($135.7bn) in March, according to state media. It briefly rose even higher at the start of April to as much as Rmb1.22tn with almost 42,000 transactions in a single day before transaction volumes fell back. "}],[{"start":48.45,"text":"The surge in the use of Cips, which Beijing introduced in 2015 to offer clearing and settlement of cross-border transactions in renminbi as an alternative to western-based payment systems, has prompted speculation that the Chinese currency is increasing its share of the global oil trade."}],[{"start":67.30000000000001,"text":"Cips data does not offer breakdowns of the types of goods being traded, but Russian energy export revenues almost doubled in March to $19bn compared with February, according to the International Energy Agency. Export revenues rose again last month to $19.2bn."}],[{"start":86.05000000000001,"text":"Analysts at Citi said a “golden window” for international renminbi usage was opening, “driven by geopolitical shifts”."}],[{"start":null,"text":"
"}],[{"start":94.20000000000002,"text":"Although there is no official data on how much oil trading is being conducted in renminbi, many analysts believe it is on the rise."}],[{"start":102.15000000000002,"text":"After the US lifted some sanctions on Russian and Iranian oil to ease the global energy crunch, buyers such as India were left with few options but to use renminbi to pay for deliveries given the inability of Russia and Iran to receive dollar payments."}],[{"start":118.20000000000002,"text":"“There must be an increasing trade in renminbi because it’s the only way that Russia can do business,” said Bert Hofman, a professor at the National University of Singapore’s East Asian Institute. “Russia can’t use dollars. There’s nothing much else out there that would not have to hit the dollar system at some point.” "}],[{"start":138.00000000000003,"text":"Chi Lo, a senior market strategist for Asia Pacific at BNP Paribas Asset Management, said: “Public information shows that Russia and Iran are key oil producers using the renminbi due to sanctions, but Saudi Arabia is seen increasingly using the renminbi for bilateral trading with China.”"}],[{"start":156.90000000000003,"text":"Any increase in renminbi-based oil purchases comes from a low base. Cheng Tan, founder of Beijing-based consultancy GMF Research, estimates that the renminbi’s share of global oil trade is between 3 per cent and 8 per cent using various methodologies, although the actual total could differ."}],[{"start":175.30000000000004,"text":"FT calculations suggest the Chinese currency’s share of global oil trade remains in the single digits even during the war. JPMorgan estimates the dollar’s share stands at about 80 per cent."}],[{"start":187.90000000000003,"text":"“There is a dearth of good data on this. We’re not able to ascertain exactly how much of the oil trade is conducted in yuan,” said Abbas Keshvani, Asia macro-strategy director at RBC Capital Markets. “But there are good reasons to think the yuan has gained prominence as a medium of exchange in this area.”"}],[{"start":206.60000000000002,"text":"China is the world’s largest importer of oil, which Keshvani said gave it leverage in negotiations over which currency is used for transactions. "}],[{"start":null,"text":""}],[{"start":215.35000000000002,"text":"The growing use of the currency in energy trading has fuelled speculation about the rise of the “petroyuan” — an echo of the idea of the “petrodollar” system under which oil-producing countries recycle their profits into assets like Treasuries, reinforcing the dollar’s global dominance."}],[{"start":232.3,"text":"However, analysts point to considerable barriers to wider renminbi adoption, even if the Chinese currency captures a larger slice of international trade."}],[{"start":242.8,"text":"For the renminbi to compete more strongly with the dollar in global oil trade would require greater global use of financial derivatives priced in the currency, analysts say. While China has opened up foreign access to parts of its onshore commodity futures markets, western interest has been lacklustre."}],[{"start":261.5,"text":"“The interest in the western world to access these onshore contracts isn’t there,” said Guy Wolf, global head of market analytics at Marex. “It’s all about the degree to which China is willing to open itself up. China is still pretty cautious . . . it has to be a fully open economy and currency to get global acceptance.” "}],[{"start":281,"text":"However, many analysts argue that gold could serve as a neutral asset for countries to recycle excess renminbi into, allowing China to maintain capital controls while competing more with the dollar in global trade. "}],[{"start":294.3,"text":"“China has regulated the Shanghai Gold Exchange with a strict settlement system,” said Zouhoure Bousbih of Ostrum Asset Management. Exporters to China “can receive payment in yuan and immediately convert excess yuan into gold bars on the Shanghai Gold Exchange international board without using dollars but with the security of a neutral asset”."}],[{"start":315.5,"text":"The Shanghai Gold Exchange launched its first offshore gold delivery vault in Hong Kong last year, opening a route for foreign holders of renminbi to convert into gold. "}],[{"start":325.4,"text":"Meanwhile, analysts say that the Iran war has provided a “proof of concept” for the Cips system."}],[{"start":331.79999999999995,"text":"“Participants that first made payments on the system because of the war now have a proof of concept that it works,” says Benn Steil, senior fellow and director of international economics at the Council on Foreign Relations."}],[{"start":344.59999999999997,"text":"“Cips still processes a much smaller share of transactions compared to western architecture. But this fits with a strategy of internationalising the renminbi at an incremental, not precipitous, pace — which is Beijing’s goal,” Steil said."}],[{"start":358.04999999999995,"text":"Additional contributions by Cheng Leng in Beijing"}],[{"start":368.74999999999994,"text":""}]],"url":"https://audio.ftcn.net.cn/album/a_1779362074_9916.mp3"}