China’s use of yuan for cross-border business growing

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China’s central bank says the country’s use of its own yuan currency for cross-border transactions has increased “notably” to 9.95 trillion yuan (US$1.63 trillion) last year.

China’s use of its own yuan currency for cross-border transactions has increased “notably” to 9.95 trillion yuan (US$1.63 trillion) last year, the central bank said on Friday (Jan 23), without giving a comparative figure.

China is seeking to make the yuan – also known as the renminbi (RMB) – used more internationally in line with its standing as the world’s second-largest economy. Some analysts predict the unit will one day rival the US dollar.

The combined volume of yuan settlement for cross-border trade, investment and financing accounted for around 20 per cent of China’s total cross-border payments and receipts last year, the People’s Bank of China (PBoC) said in a statement.

But while Beijing is looking to promote the yuan, its value is closely controlled and authorities keep a tight grip on the capital account – investment and financial transactions, rather than those related to trade – over concerns that unpredictable inflows or outflows could harm the economy and their oversight of it.

China’s official news agency Xinhua said in a commentary on Friday that yuan internationalisation would benefit the entire world. “The international usage of the RMB is still in its early days, but in the long run it helps diversify and improve the global reserve system, which is currently dominated by a volatile US dollar,” it said.

China’s commerce ministry said this week it will it will only issue figures for inward and outward foreign investment in yuan, dropping the dollar statistic. Spokesman Shen Danyang said no big countries, such as the US, would announce such figures in another country’s currency, adding that it was also partly an effort to push the yuan’s greater international role.

Earlier this month, Customs only issued trade values in yuan at its quarterly briefing, with the official dollar amount made available later on its website.

Transactions organisation SWIFT estimates the yuan is the seventh most used global payment currency, though with only a 1.59 per cent share as of October last year.

“We have seen a significant increase in RMB usage for payments with China and Hong Kong. Most of this growth is from early adopters and main RMB clearing centres,” Astrid Thorsen, head of business intelligence for SWIFT, said in a statement in November. “This is a good sign for RMB adoption rates and internationalisation.”

China has set up yuan clearing arrangements with 10 countries and regions and signed currency swap agreements with 28 central banks, the PBoC statement said. In the latest agreement, Switzerland’s central bank said on Wednesday it had signed a pact with the PBoC to set up clearing arrangements for yuan trading. The Swiss National Bank said the agreement will facilitate bilateral trade and investment.

 

 

Source : Channel News Asia | January 23, 2015

Thomas D’Innocenzi

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About thomasdinnocenzi

Thomas D’Innocenzi is a highly accomplished, results-focused international consultant with extensive experience in global sourcing and business development worldwide to meet evolving business needs. Tom has proven ability in implementing and managing profitable global marketing and sourcing operations. He has extensive experience in international business development to accommodate rapid growth. Skilled in building top-performing teams, bench-marking performance, and developing organizations to improve efficiency, productivity, and profitability. Experienced transition leader and change agent. Tom founded Nova Advisors with the mission of providing expert Global Business Development consulting services for companies seeking to expand their market share as an independent consultant. Tom has a network of experts and advisors throughout the Asia-Pacific region and North America. His expertise includes business development, global sourcing, manufacturing, commodities, logistics, QA/QC, FDA, regulatory compliance, sustainability, and supply chain optimization. Tom is experienced in the medical device, apparel, consumer goods and technology services verticals helping companies advance their global sourcing capabilities and develop new markets through a local and sustained approach. Located in SE Asia and the United States, Tom expands market reach to drive sales. His global sourcing strategy includes directly negotiating with commodity suppliers, supply chain networks and distributors for optimal terms based on his expertise and first-hand knowledge of the players. Contact Tom to use his consulting service to increase your global market and make global sourcing profitable for you in the Asia Pacific Region and the United States. http://www.NovaAdvisors.com thomas@NovaAdvisors.com USA Direct: +1.904.479.3600 SINGAPORE: +65.6818.6396 THAILAND: +662.207.9269
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