As we reported in December, Pakistan has been contemplating the move since last month's formal launch of the Long Term Plan for the China-Pakistan Economic Corridor (CPEC), signed by the two sides on November 21. The CPEC is a flagship project of China's Belt and Road initiative - the 3,000 km, over $50 billion corridor which stretches from Kashgar in western China to Gwadar port in Pakistan on the Arabian sea.
At that time the agreement was signed Pakistan's Minister for Planning and Development Ahsan Iqbal said that while Pakistani currency would be used within the country, China desired that bilateral trade should take place in yuan instead of dollars, in yet another push to de-dollarize what China considers its sphere of influence. "We are examining the use of yuan instead of the US dollar for trade between the two countries," Iqbal said in what was the earliest tip-off of this week's bombshell news, and added that the use of yuan was not against the interest of Pakistan. Rather, it would "benefit" Pakistan.