China — the world's largest importer of crude oil — is undergoing a crucial strategic turning point: restructuring its economy to gradually reduce reliance on fossil fuels. This is not merely a green energy transition, but also a far-reaching strategy aimed at diversifying national reserves and mitigating geopolitical risks.
Reducing USD Payment Share and Reshaping Energy Trade
Although China's overall demand for crude oil for heavy industry and petrochemicals remains high, the country has proactively slashed the share of US dollars used in energy import transactions (with USD-denominated contracts dropping by 40–50% compared to previous levels). This shift stems from two core drivers:
Domestic Consumption Optimization: Demand for gasoline and diesel for road transport is plateauing due to the rapid rise of electric vehicles.
Promoting Local Currency Settlement (De-dollarization): Beijing has altered its payment mechanisms. China has increased crude oil purchases from Russia using Russian Rubles (RUB) or Chinese Yuan (RMB), and trades with Iran primarily in RMB through its own payment system (CIPS). This reduces exposure to Western financial sanctions and incrementally strengthens the global status of the RMB.
Breakthroughs in Green Energy, EVs, and Rare Earth Dominance
To ensure energy security while reducing oil dependency, China has built a world-leading alternative energy infrastructure:
Solar and Nuclear Boom: China accounts for a massive share of global installed solar capacity and maintains the world's fastest construction pace for next-generation nuclear reactors. This electricity directly powers industrial manufacturing and the national charging grid.
Comprehensive Transport Electrification: Transport is electrifying at a breakneck speed, with electric vehicles (EVs), electric trucks, and e-buses accounting for a significant portion of new vehicle sales.
Rare Earths and Battery Supply Chain Control: By controlling the majority of global rare earth mining and refining capacity — critical materials for permanent magnets in EV motors — China not only secures its domestic electrification but also dominates the global green technology supply chain.
Financial Restructuring: Trimming US Debt, Accumulating Gold
Hand in hand with the energy transition, China is executing a macroeconomic strategy to safeguard its national assets:
Divesting US Treasuries, Buying Gold: The People's Bank of China (PBoC) has reduced its holdings of US Treasury bonds to below $800 billion while maintaining a continuous net gold purchasing streak for over 20 consecutive months to diversify its foreign exchange reserves.
Market Impact: Strong buying momentum from China and other central banks has provided a solid foundation driving gold prices to historical highs. Simultaneously, the trend of paring back US Treasuries gradually erodes the long-term dominance of the US dollar, even though the USD retains short-term strength driven by interest rate differentials.
Vietnam’s Adaptation: Transport Electrification and Biofuels
In response to the global energy transition, Vietnam is proactively implementing adaptive strategies suited to its domestic context. Vietnam's goal is not geopolitical or currency competition, but rather energy security and emissions reduction commitments:
Promoting the EV Ecosystem: The Vietnamese government has introduced various incentives (such as registration fee exemptions/reductions and special consumption tax cuts) to encourage the adoption of both domestic and international electric vehicles, gradually replacing internal combustion engine vehicles.
E10 Biofuel Roadmap: Expanding the rollout of biofuel blends (such as E5 and E10) helps reduce fossil fuel consumption, improving urban air quality and curbing mineral fuel import costs.
China's shift represents a powerful combination of green energy, EV technology, and financial restructuring. This trend is accelerating energy transition roadmaps across the globe, encouraging countries like Vietnam to hasten their move toward electrification and sustainable energy.