China's De-Dollarization Drive Has Hit a Wall as Yuan Deposits Abroad Sit at $234 Billion
A PBOC blueprint from June 17 cannot close the gap between $234 billion in offshore yuan and the $15 trillion dollar-denominated pool it aims to displace.
Foreign Policy reported on June 24 (2026-06-24) that yuan-denominated deposits outside China stood at just $234 billion in early 2025 — a sum the publication described as a rounding error against the roughly $15 trillion in dollar-denominated assets held abroad. The People's Bank of China governor unveiled a fresh blueprint on June 17 (2026-06-17) to channel more global financial flows into the yuan, but the gap in offshore deposit volumes is a blunt measure of how far the currency has to travel.5
For energy traders, the numbers matter because oil, liquefied natural gas and coal are priced in dollars. China is the world's largest importer of crude and LNG. SWIFT data show the yuan's share of global cross-border payments has held around 2% for most of the past five years, with no acceleration visible in 2025.1
There is a split, however, between external settlement and internal flows. The yuan's share of China's overall international transactions — across goods, services and assets — rose above 56% in March 2026, after plateauing for much of 2025. The CIPS interbank network, Beijing's alternative to SWIFT, processed the equivalent of $55.5 billion across 4,047 transactions as of November 2025, according to the central bank's deputy governor. But more than 95% of those transactions are denominated in e-CNY. The central banks of Saudi Arabia, Thailand and the United Arab Emirates are formal CIPS participants, yet none has shifted spot crude or LNG settlement away from dollars.2
The yuan's limited offshore reach is partly an artefact of Beijing's capital-control framework. The Economist noted in May 2026 that the desire to promote yuan usage abroad clashes with efforts to insulate China from global financial swings, producing a system that has left China neither a meaningful force in global finance nor protected from external shocks.1
The funding cost constraint is equally concrete. Weak domestic borrowing and spending have forced the PBOC to cut its benchmark policy rate to 1.4%, more than two percentage points below the US equivalent. That differential reduces the incentive for foreign entities to hold yuan-denominated assets, a disincentive that new blueprints cannot easily offset.2
Where the dollar's dominance faces its most direct test is in sanctions-adjacent flows. An estimated $141 billion in illicit stablecoin payments moved through the global financial system in 2025, up from roughly $50 billion the year before. The A7A5 ruble-pegged stablecoin alone accounted for more than half of the 2025 total, with the bulk linked to sanctions evasion and money laundering. Total illicit financial flows through the system reached an estimated $4.4 trillion in 2025, roughly 3.8% of global GDP, an increase of $1.3 trillion in two years, according to War on the Rocks, citing data published on June 2 (2026-06-02).3
The US response has moved from monitoring to seizure. Treasury Secretary Scott Bessent announced on May 29 (2026-05-29) that the United States had seized approximately $1 billion in Iranian-linked cryptocurrency assets under Operation Economi. That action sits alongside 60-day waivers on Iranian oil sanctions announced on June 23 (2026-06-23), which contributed to ICE Brent crude front-month trading at $73.14 as of June 24 (2026-06-24) 23:52 UTC and NYMEX WTI front-month at $69.91 as of the same snapshot.3
The US-Iran deal affects the dollarised settlement chain for Middle Eastern crude. If Hormuz flows normalise under a framework that keeps Iranian sanctions partially intact, the routing of Iranian barrels through third-country intermediaries — a channel that has supported unofficial yuan-denominated oil deals — becomes commercially harder to sustain. Gulf producers whose central banks already sit in CIPS have not moved their spot oil pricing out of dollars, and the June 17 PBOC blueprint contains no mechanism that would change that.4
JKM Asian LNG front-month stood at $15.55 per million British thermal units as of June 24 (2026-06-24) 23:52 UTC. Whether a Hormuz recovery reprices Asian spot LNG lower or higher depends on physical cargo flows, not on which currency settles those cargoes. The next concrete data point for yuan internationalisation is the CIPS transaction share for non-Chinese counterparties in Q3 2026, which will show whether the June 17 blueprint attracted any new volume or whether the 95% e-CNY concentration held.5,2