BEIJING- China is taking its first steps towards paying for imported crudeoil in yuan instead of the US dollar, a key development in Beijing’sefforts to establish its currency internationally.

Shifting just part of global oil trade into the yuan is potentially huge.Oil is the world’s most traded commodity, with an annual trade value ofaround $14 trillion, roughly equivalent to China’s gross domestic productlast year.

A pilot programme for yuan payment could be launched as early as the secondhalf of this year, two of the people said.

Regulators have informally asked a handful of financial institutions toprepare for pricing China’s crude imports in the yuan, said the threesources at some of the financial firms.

“Being the biggest buyer of oil, it’s only natural for China to push forthe usage of yuan for payment settlement. This will also improve the yuanliquidity in the global market,” said one of the people briefed on thematter by Chinese authorities.

China is the world’s second-largest oil consumer and in 2017 overtook theUnited States as the biggest importer of crude oil. Its demand is a keydeterminant of global oil prices.

Under the plan being discussed, Beijing could start with purchases fromRussia and Angola, one of the people said. Both, like China, are keen tobreak the dollar’s global dominance.

Russia and Angola are two of the top suppliers of crude oil to China, alongwith Saudi Arabia.

The move would mark a major step in reviving usage of the currency of theworld’s second-largest economy for offshore payments after several years ofon-again, off-again measures.

If successful, it could also trigger shifting other product payments to theyuan, including metals and mining raw materials.

All three sources, who spoke to Reuters on the condition that they not benamed, said the plans were at early stages. Officials at some of China’sstate oil companies said they had not heard of such plans. – Agencies