China to expand cross-border RMB businesses

0 Comment(s)Print E-mail Xinhua, March 1, 2012
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China will further boost the use of its currency in cross-border trade and investment settlements in 2012 as it gradually makes the yuan more internationally convertible, the country's central bank said Wednesday.

The central bank will continue expanding the variety and scope of yuan's cross-border businesses based on serving and bolstering the real economy, the People's Bank of China (PBOC) said in a statement on its website.

It will also closely monitor and analyze yuan, or RMB, flows to control risks in the currency's cross-border settlement, the PBOC said.

Meanwhile, the central bank will step up reform of the RMB exchange mechanism and make the yuan convertible under the capital account at a steady pace.

To reduce reliance on the greenback, China has exerted enormous efforts to make the yuan more international over the past few years.

It allowed Hong Kong to establish an offshore yuan market and has signed 1.3-trillion-yuan currency swap contracts with 14 countries and regions to allow the currency to circulate outside the mainland.

Meanwhile, the country introduced a yuan trade settlement scheme in July 2009 in a number of regions and expanded it nationwide in 2011.

According to earlier data released by the central bank, China's overall cross-border trade settlement in yuan under the current account hit 2.58 trillion yuan (409 billion U.S. dollars) by the end of 2011 since the scheme was launched.

The trade settlement in yuan last year increased 3.1 times from a year earlier. The settlement in yuan for goods trade accounted for 6.6 percent of the total cargo imports and exports. The portion rose 4.4 percentage points from 2010, the PBOC said in the Wednesday statement.

China has also approved foreign direct investment in RMB obtained overseas. In 2011, it gave the green light to investing overseas RMB gained by qualified institutional investors in mainland securities markets.

Last year, the yuan-denominated outbound direct investment totaled 20.15 billion yuan while foreign direct investment settled in RMB on the Chinese mainland topped 90.72 billion yuan. Both saw remarkable growth from a year earlier, the central bank said.

The PBOC also said in an earlier report that it will explore ways to allow individuals to carry out yuan settlement in cross-border trade.

However, its Shenzhen branch Wednesday refuted previous media reports that it approved individuals' trade settlement in yuan, saying it had never issued documents relating to the matter.

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