Iran is increasingly settling trade with China in its currency yuan, as Beijing’s long-term push to internationalise its currency accelerates, Majidreza Hariri, head of the Iran-China Chamber of Commerce, said on May 7.

The shift is not a reaction to regional tensions, including US military activity in the Persian Gulf or disruptions in the Strait of Hormuz, but rather follows a visit by Iran's Foreign Minister Abbas Araghchi to Chinese leadership on May 5.

He said the yuan’s share of global trade has risen from less than 1% fifteen years ago to over 7% today, and could reach 15% by 2030 if current trends continue.

“These events act as a catalyst at best,” Hariri said. “The yuan’s rise predates the Ukraine conflict and moves against the dollar were underway even with Saudi Arabia and the UAE three years ago.”

It is said that the Beijing’s strategy combines regional trade agreements, cross-border banking systems, and bond issuance to embed the yuan in global commerce.

Geopolitical developments have nonetheless reinforced the trend. Following the 2022 Russia-Ukraine war and Western sanctions on Moscow, yuan-denominated trade between China and Russia surged. ASEAN countries have also recently agreed to conduct part of their trade with China in yuan.

Hariri highlighted the China International Payment System (CIPS) as a key enabler, linking over 1,700 banks and handling $24tn in 2024, up 43% from the previous year. “CIPS transforms the yuan into a mainstream financial instrument,” he said, noting its potential to underpin Iran’s imports of staple commodities from Russia, Kazakhstan, and Malaysia.

According to the Bank for International Settlements, the yuan’s global trading volume has reached $817bn daily, lifting its share of foreign exchange transactions from 7% in 2022 to 8.5% in 2025, narrowing the gap with the pound sterling at 10.2%.

Tools such as “Panda” and “Dim Sum” bonds and China’s e-Bridge digital payment network further facilitate international yuan use.

Structural barriers remain as capital controls, limited convertibility, and state interventions in monetary policy continue to constrain investor confidence. According to Swift data, the yuan accounts for only 4% of cross-border payments, compared with the dollar’s 50% share.

For Iran, expanding yuan trade offers a hedge against dollar dependency and sanctions pressures. Hariri said Tehran could settle a large portion of imports with yuan. The broader implication is a gradual shift toward a multipolar global financial system, in which the dollar retains dominance but alternative currencies carve meaningful niches.