On July 19, China officially launched the world’s largest hydropower project — the Yarlung Tsangpo cascade power stations in the lower reaches of the river.

Once completed, the project’s annual power generation will surpass that of the Three Gorges Dam, reaching a staggering 300 billion kilowatt-hours.

Almost simultaneously, another set of figures on China’s “power going global” strategy also drew attention: in 2024, China’s newly added overseas power generation capacity reached 24 GW, of which 52% came from new energy sources. This set a new record and has already formed a vast “power export belt” across Asia, Africa, and Latin America.

In an increasing number of Belt and Road countries, China is not only building power plants, grids, and transmission lines but is quietly promoting a new model of energy cooperation: “electricity agreements” priced and settled in renminbi and tied to long-term usage rights.

A real example: in 2023, China’s HT Energy signed a 500 MW wind power agreement with Uzbekistan. What’s particularly notable is that the electricity price — from financing and procurement to bill settlement — is entirely settled in renminbi, with no use of U.S. dollars.

As the world searches for alternatives to oil in the face of global warming, and as China’s wind, solar, and other new energy power generation continues to expand its exports worldwide, some have boldly raised this question:

In a future where the petrodollar gradually loses its dominance, could the renminbi, by leveraging the indispensable demand for “electricity,” become the world’s new anchor currency?

Why Is the Renminbi Targeting Electricity?

Some may wonder: is the idea of an “electricity-backed renminbi” really feasible? And why must the renminbi be anchored to electricity in the first place?

The logic behind this can actually be traced back to a historical analogy put forward by fiscal expert Mr. Lu Qiyuan.

As Lu explains, the credibility of the renminbi did not emerge out of thin air. Its initial anchor was neither gold nor oil, but something far more ordinary and closely tied to people’s daily lives — salt.

In the final stages of Chinese Civil War,  especially around 1948, the liberated areas had no gold or foreign exchange reserves. Instead, they relied on physical assets such as salt and grain to stabilize the currency’s value. Local currencies  (such as the Beihai yuan and the Jin-Cha-Ji border region yuan) were, in fact, backed by strategic materials like salt as their standard of value.

Therefore, Lu Qiyuan pointed out: it was precisely because the liberated areas back then had sufficient reserves of physical goods and could control the volume of issuance that the Communist Party was able to anchor its currency to everyday necessities instead of relying on gold.

This is why more and more people are drawing inspiration: if the country could once use salt as a physical anchor, then today, if China builds a stable electricity pricing system overseas and ties power exports to renminbi settlement, could electricity flows serve as the renminbi’s new physical anchor for cash flow?

Such an “anchor” would be more essential than gold and more reliable than oil — after all, every country consumes electricity every single day, and with the rise of electric vehicles and AI data centers, the rigid demand for electricity will only grow.

According to an IEA report, global EV sales in 2024 exceeded 17 million units, a surge of more than 25% year-on-year. By 2035, electric vehicles are expected to account for nearly 50% of worldwide auto sales.

Similarly, the data centers behind AI are also massive power guzzlers.

After GPT-5 was released, real-world tests at the University of Rhode Island’s AI Lab showed that GPT-5 (high) consumed on average 18.17 watt-hours of electricity to generate a medium-length response of about 1,000 tokens.

With ChatGPT handling around 2.5 billion requests per day, the total daily electricity consumption of GPT-5 would be equivalent to the daily usage of 1.5 million American households.

Given how power-hungry AI is, it’s not hard to understand why OpenAI went to such great lengths to secure an additional 4.5 gigawatts of computing capacity from Oracle.

In the future, this rigid demand for electricity — combined with China’s advantages in new energy generation — could form the foundation for putting the concept of an “electricity-backed renminbi” into practice.

In recent years, when cooperating with China on new energy projects, some countries have already begun to show signs of settling payments in renminbi.

For example, in June 2024, China installed a 200 MW “rooftop solar” project along the China–Laos Railway — essentially giving the trains a giant solar hat. Now, every day the trains run, Laos’s power grid has to “scan and pay” the Guangxi grid in renminbi for the electricity, amounting to roughly 300 million yuan a year.

In June 2024, the solar power projects at Wild Elephant Valley and Mohan in Laos along the China–Laos Railway were put into operation.

What does this have to do with the renminbi?

Previously, Laos had to first exchange its U.S. dollars into renminbi before buying Chinese equipment or paying for operation and maintenance fees — in the process, the dollar “skimmed off two layers of profit.”

Now, with direct renminbi settlement, the Central Bank of Laos simply deposits the money into an offshore account in Kunming. In this way, the dollar’s cut is eliminated, and the renminbi flows straight into Laos’s own pocket.

Similarly, in February 2025, Shanghai-based HT Energy laid down 700 million yuan worth of solar panels on the Kazakh steppe. In the past, projects were priced in tenge, but because the tenge is unstable, every time it depreciated Kazakhstan bore the losses. This time, the contract directly specified “priced in renminbi.” Now, China is turning the steppe’s sunlight into a “renminbi savings account,” which not only helps stabilize domestic electricity prices but also reduces the need to hoard U.S. dollars.

Another example is Brazil. While the Amazon basin is rich in hydropower resources, more than 80% of the country’s electricity demand is concentrated over 2,000 kilometers away in the southeastern coastal region.

Later, State Grid China stretched a more than 2,000-kilometer-long “giant power line” across the Amazon, channeling the flood-like hydropower to the cities of the southeast.

In the past, when Brazilians paid their monthly electricity bills, they first had to convert reals into U.S. dollars, then send the money to State Grid, which would convert it back into renminbi to buy equipment and repay loans. Along the way, the dollar collected a toll, skimming off profit twice.

Now, State Grid simply issued a “panda bond” in Hong Kong — essentially selling in one go the 3 billion yuan in electricity payments that Brazilians are due to make over the next five years. In this way, the money flowing out of sockets in São Paulo goes straight into the panda bond account without taking any detours.

Encircling the Center from the Margins

The reason why the “electricity renminbi” strategy works in these countries can be summed up in one sentence: they all want electricity, but all have their throats gripped by the U.S. dollar. In the past, the dollar acted like a “toll collector,” dictating exchange rates, interest, and transaction fees.

The “electricity renminbi” model, however, tears down these dollar “toll booths” and allows the renminbi to flow straight through.

Take Laos, for example. Contracts signed by the Lao government with foreign companies are uniformly denominated in U.S. dollars, while ordinary people pay their electricity bills in Lao kip. When the kip depreciated — from 9,500 per dollar in 2021 to 20,000 per dollar in 2024 — the Lao power company suddenly had to cough up more than double the amount of kip for the same kilowatt-hour in order to exchange dollars and repay its debts.

By contrast, the renminbi’s fluctuations against the kip are far smaller, and banks in China and Laos have opened a “direct channel,” with transaction fees close to zero.

In short: what the renminbi brings is not just a change in the settlement currency, but the removal of three sharp blades — high interest, high volatility, and high fees — replacing them with a straight road of low interest, stable exchange rates, and zero fees.

But here’s the problem: the countries currently settling electricity in renminbi are basically all in the developing world — small nations with limited influence and little say on the global stage. Can this kind of “electricity renminbi” strategy aimed at peripheral countries really shake the dollar’s dominance?

On this question, Lao Ju’s view is: the times have changed — fragmentation and “resilience” matter more today.

Think back: when was the petrodollar system established?

It was in the 1970s.

At that time, global population and energy consumption were concentrated in Europe and the United States. Digital technology hadn’t emerged yet, and settlement had to run through centralized platforms.

But now? Africa, South Asia, and Central Asia are gradually becoming the main battlegrounds for new energy demand. Countries are building their own payment systems, and the trend of de-dollarization is accelerating.

Add to that blockchain, digital currencies, and interconnectivity making it possible to “bypass the dollar” — resilience has become more important than pure efficiency.

On top of this, with de-globalization intensifying and international politics full of intrigue, the old centralized settlement systems — like SWIFT — are very likely to turn into “financial weapons” of the future.

It’s like a dam: it can quickly regulate water flow and supply it in bulk, and it seems far more powerful than many small irrigation channels.

But here’s the catch: once you upset the U.S., you will be cut off from the main water pipe (for example, being sanctioned or kicked out of SWIFT). Then you are left with no water to drink. That’s the “single point vulnerability” of a centralized system.

As a result, many countries naturally start looking for “backup pipelines” — willing to cooperate with partners who may not be as “powerful,” as long as their necks aren’t being squeezed.

The electricity renminbi finds its potential to grow precisely in these marginal gaps.

It is more flexible and decentralized; it relies not on the threat of sanctions, but on economic and technological attraction.

More importantly, it can adapt to a variety of local conditions — low-credit countries, resource-backed projects, long-term loans — rather than forcing everyone into a single settlement method.

For participating countries, it offers an “imperfect, yet safer and more flexible” alternative.

In a world that is increasingly diverse, digitalized, and oriented toward emerging markets, it will continue to grow and permeate — until one day… the petrodollar system is no longer the only game in town.

Countermeasures and Competition

When it comes to whether the “electricity renminbi” can truly succeed, some may ask:

If China’s electricity-renminbi system rises in the future, wouldn’t the U.S. push back? And what if the U.S. also starts expanding into the global new energy market?

Truth be told, such countermeasures and competition have already begun.

For example, in recent years the U.S. introduced the Inflation Reduction Act (IRA), which ties energy storage subsidies to a “North American or friendly-country manufacturing” framework, while imposing tariffs of up to 25% on Chinese batteries, PCS, and inverters. At the same time, the U.S., together with the G7, launched so-called “green supply chain risk reduction” policies, effectively squeezing Chinese companies out of high-end markets.

On the other hand, the U.S. has also made moves in the new energy electricity sector.

For instance, Tesla has been steadily pushing into energy storage in recent years. Elon Musk’s Megapack (large-scale energy storage system) is entering the power markets in the U.S., Australia, and Europe. By Q1 2025, it ranked second globally in energy storage capacity, accounting for 15% of total installations, already posing direct competition to China’s overseas electricity ventures.

Faced with these countermeasures and competition, China also has several cards.

The first card is the advantage of a full industrial chain + low cost.

In terms of cost, Chinese companies offer photovoltaic, wind, and energy storage equipment at 30%–50% lower prices than Tesla — a fatal temptation for budget-strapped peripheral countries. For example, in 2024, China’s solar + storage project in Indonesia cost half as much as the U.S. proposal, and Indonesia chose China outright.

Regarding the full industrial chain, China doesn’t just export individual equipment; it delivers a complete system including power stations + transmission and distribution + energy storage + talent training.

In developing countries lacking infrastructure and technical capacity, this “system package delivery” is extremely attractive — sometimes the only acceptable solution.

Take Guinea in West Africa, for example. There’s a river there called the Konkouré, known locally as the “Three Gorges of West Africa.” At the end of 2023, China’s hydropower sector delivered the Suaipiti Hydropower Station as a complete package: dam, turbines, transformers, transmission towers, plus a set of small robots that automatically clear silt — all proudly “Made in China.”

Once the power station went online, it supplied one-third of Guinea’s nationwide electricity. Even better, the Chinese team stayed behind and trained over 800 local technicians hands-on, giving West Africa its first hydropower training center, where graduates could step directly into jobs.

Beyond cost-effectiveness and the full industrial chain, China’s another trump card is its ability to construct in extreme environments and terrains.

Ask a U.S. company to build in Angola’s mountains, Myanmar’s primeval forests, or Pakistan’s highlands — they often refuse or the costs double.

Chinese engineering firms can build power stations, lay grids, dig tunnels, and install optical cables in these areas as easily as walking through their own backyard. This is field capability accumulated over decades of “infrastructure going global,” something the U.S. simply can’t match.

Take Angola’s Caculo Cabaça Hydropower Station, for example. The site is deep in the hills of Bié Province — rainy season, mudslides, a construction nightmare.

The Chinese team transplanted the Three Gorges’ techniques of underwater blasting + high-slope anchoring, carving a 217-meter-high concrete-faced rockfill dam on a cliff. With an installed capacity of 2,170 MW, they doubled Angola’s nationwide power generation capacity.

Even more extreme is Myanmar’s Taiping River Hydropower Station, located in the Bhamo jungle. Temperatures reach 40°C in the dry season, and floodwaters can submerge half the site in the wet season. Machinery gets stuck up to the waist, and there isn’t even a proper road locally.

When PowerChina arrived, they first built a 30-kilometer construction access road. Then they dismantled the “giant turbine wheels” into several sections, loaded them into “floating boxes” similar to inflatable boats, and transported them in ingenious ways: during the dry season, the boxes functioned like trailers; during the rainy season, they floated on the water all the way to the construction site. Once there, the turbine wheels were reassembled like pieces of Lego. In the end, they successfully installed and connected a 240 MW generating unit to the grid.

Conclusion

From an international perspective, if the electricity renminbi eventually becomes an alternative outside the oil–dollar system, what would it actually mean for the world?

In the past, global financial hegemony was like a game of “musical chairs”: the chairs represented widely recognized “hard currency anchors.” The three main chairs — oil, gold, and U.S. Treasury bonds — were all firmly occupied by the dollar. Anyone wanting to sit had to first exchange for dollars.

With this financial dominance, the U.S. repeatedly harvested the sweat and labor of Chinese manufacturing through the tide of dollars, while also skimming profits from the rest of the world through interest rate hikes.

Imagine you are a worker in a coastal Chinese factory, producing shoes, electronics, and furniture every day, most of which are eventually sold to Europe and the U.S. When your company negotiates prices with clients, the settlement currency is U.S. dollars.

To pay your wages, buy raw materials, and pay taxes, the factory must convert dollars into renminbi. But in the process, exchange rates come into play, influenced by Federal Reserve interest rate decisions.

When the dollar appreciates (Fed raises rates), each 10 dollars buys fewer renminbi. This compresses the company’s profits, forcing it to cut wages, lay off workers, or demand unpaid overtime to survive.

When the dollar depreciates (Fed lowers rates), the dollar loses value, but raw materials — often imported, like chips and chemical materials — are priced in dollars. What previously bought 100 units of chips now buys only 80. The factory must spend more dollars to maintain production levels.

In other words, the Fed acts like a “river god,” controlling the flow of dollars:

At high tide, it sucks global capital back to the U.S. (capital inflow, dollar appreciation).

At low tide, it floods depreciated dollars into the world, forcing others to trade more labor for the same value.

This is the ultimate form of global exploitation.

China’s approach is to use the electricity renminbi to gradually remove each of these three chairs — oil, gold, and U.S. Treasury bonds — turning the dollar from a “golden chair” into a “plastic stool,” and eventually leaving it with nothing to sit on.

When China’s photovoltaic and wind power becomes far cheaper than a barrel of oil, the oil chair is removed.

When China converts electricity payments from solar plants into digital tickets that can be traded or used as collateral, gold — immobile and indivisible — is removed.

With the first two chairs gone, U.S. Treasuries are reduced to a thin sheet of “American credit.”

Compared with U.S. Treasuries, China can turn electricity projects into renminbi-denominated bonds — low interest, stable cash flows, and even payable with natural resources like grain and minerals.

With these advantages, global capital will naturally turn to buy “electricity renminbi bonds,” leaving the final chair of dollar dominance — U.S. Treasuries — removed as well.

Once the dollar hegemony falls, Chinese manufacturing will no longer be harvested by dollar tides, and raw materials and energy can be priced in renminbi.

If the U.S. tries to skim profits through interest rate hikes again, it will find that half the world’s factories are already running on renminbi electricity — and dollar rate hikes will only cut power to itself first.

By then, Chinese companies and workers can finally hold their heads high and fully enjoy the fruits of their own labor.

Editor: Zhiyu Wang