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Weakening USD makes Chinese exporters turn to yuan settlement

08-16-2011 09:41 BJT

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With the dual pressures of a weakening U.S. dollar and stronger yuan, Chinese exporters are looking to avert currency exchange risks by using the local currency to settle payments. Qi Tianxing has more.

The U.S. dollar's continuous weakening since the beginning of this year is taking a toll on Chinese exporters. In China's eastern city of Yiwu, a manufacturing hub that supplies half of the world's Christmas gifts, manufacturers are choosing to settle payments in yuan, to offset the negative impact of currency fluctuations.

A manufacturer Cai Qinliang said, "We have added a yuan settlement term in our payment contracts, and now almost all of our deals are settled in the local currency. If the deal is settled in the dollar, then it has to be based on that day's currency exchange rate."

This move has added uncertainties for their foreign trading partners. Many express mixed opinions.

A Bolivian Trader said, "Yuan is better.”

A Saudi Arabian trader said, "Of course U.S. dollar settlement is more convenient for us. Yuan settlement will impact us when the exchange rate fluctuates."

Dollar settlement is becoming more widely adopted among Yiwu's manufacturers of Christmas products. According to industry estimates, around 90 percent of local Christmas gift makers are settling payments in the Chinese currency.

Editor:Li Wanran |Source: CNTV.CN

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