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New policies help yuan’s internationalization

08-29-2011 10:14 BJT

By Mo Hong'e

BEIJING, Aug. 29 (Xinhuanet) -- China will extend to the entire country a program allowing the use of the yuan to settle cross-border trade, the People's Bank of China (PBOC) said on Aug. 23.

The extension is a crucial step in boosting cross-border use of yuan, and will better meet enterprises’ needs and further facilitate trade and investment, the central bank said on its website.

The Ministry of Commerce also released draft guidelines on how foreign investors can use yuan acquired overseas for direct investment in the country.

Foreign investors will be able to make direct investments in China with yuan legally obtained overseas, according to a draft released by the ministry, which is currently soliciting public feedback on the new rules.

Analysts said these moves indicated China's ambitions of pushing forward the internationalization of the yuan.

The pace of internationalization of the yuan speeds up. The first trial of cross-border trade settlements in yuan was approved in Shanghai in July 2009. Then the pilot area was expanded to 20 provinces, municipalities and autonomous regions in June 2010. Overseas, the program was extended to all countries and regions after being piloted in Hong Kong, Macao, and ASEAN (Association of Southeast Asian Nations). Now the new policy released on Aug. 23 allows all parts of the country to be able to use the yuan or Renminbi, in cross-border trade settlements.

It was generally regarded that the new policy can help enhance the acceptance of the currency by trade partners of the surrounding countries and regions of China and trade partners in many developing countries and regions. It can also boost the acceptance willingness of some American and European trade partners to the yuan.

China's yuan settlement in cross-border trade surged to 957.57 billion yuan ($149.62 billion) in the first half of 2011, 13.3 times more than that for the same period of last year, according to statistics from the central bank.

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