China and Saudi Arabia Expand Currency Swap to $10 Billion

Agreement Accelerates Yuan Use in Energy Trade

The People's Bank of China and the Saudi Arabian Monetary Authority signed an expanded bilateral currency swap agreement worth 69 billion yuan ($10 billion) on December 1, 2025, tripling the size of the existing arrangement. The agreement, signed during Chinese Vice Premier Ding Xuexiang's visit to Riyadh, also includes provisions for yuan-denominated settlement of Saudi crude oil sales to China.

Saudi Finance Minister Mohammed Al-Jadaan said the expanded swap was "a natural evolution of the trade relationship between the world's largest oil exporter and largest oil importer." China imported 1.75 million barrels per day of Saudi crude in the first 10 months of 2025, worth approximately $52 billion.

Yuan Settlement Provisions

Under the new terms, Saudi Aramco can accept payment in yuan for up to 15% of its crude sales to Chinese refiners, up from a pilot arrangement covering 5% that began in 2024. Four Chinese state-owned refiners — Sinopec, PetroChina, CNOOC, and Sinochem — have agreed to settle a portion of their Saudi crude purchases in yuan through designated clearing banks in Shanghai and Riyadh.

The agreement does not replace dollar pricing for Aramco's official selling prices, which remain set in U.S. dollars. However, the settlement flexibility reduces both parties' need for dollar liquidity in bilateral trade. JP Morgan estimated that full implementation could shift $8-12 billion in annual energy trade from dollar to yuan settlement.

Petrodollar Implications

The agreement reignited debate about the future of the petrodollar system. Rachel Ziemba, an adjunct senior fellow at the Center for a New American Security, said the arrangement was "significant but not seismic" for dollar dominance. "The dollar's role in global oil pricing is about far more than bilateral settlement — it's about depth, liquidity, and trust in U.S. financial markets," Ziemba said.

The yuan's share of global trade finance reached 5.8% in October 2025, according to SWIFT data, up from 4.7% a year earlier. The dollar remained dominant at 47.3%, with the euro at 22.9%.

Broader Context

The expanded swap is part of a wider recalibration of Saudi Arabia's international partnerships. Crown Prince Mohammed bin Salman has pursued membership in the BRICS grouping and the Shanghai Cooperation Organization while maintaining the kingdom's defense partnership with the United States.

The next meeting of the China-Saudi Arabia High-Level Joint Committee is scheduled for March 2026 in Beijing, where officials are expected to discuss Chinese investment in Saudi Arabia's NEOM project and joint ventures in hydrogen energy.