China to expand yuan settlement program for exporters

 
on March 03 2011 10:12 AM
Protect your money
Getting money in and out of China, as well as ensuring against fraud, is notoriously complicated. Bringing money into China must come via an approved investment from either the local government authorities or the Chinese Central Government. Once approved, this investment threshold sets the maximum amount of investment that can be introduced into China and exchanged from USD into RMB. Taking your money out of China can be done either through a dividend or through a repayment of a loan. It is very important that the business charter is established so that one of these vehicles can be utilized. One way around this issue is to establish your business as a Wholly Owned Free Enterprise in Hong Kong or Singapore. This will allow you to do all foreign business in USD, HKD or SGD, thus making your foreign business always convertible. Reuters

China will further expand its yuan settlement program for exporters across the country, reported the People’s Daily, citing a statement from the central bank.  At the end of last year, 67,000 exporters already participated in the program. 

This program allows exporters to conduct their trades and payment with foreign countries using the yuan instead of currencies like the US dollar.

Its expansion is partly in response to the growing international demand for the yuan and the increasing integration of China into the global economy.

Previously, China said it wanted to allow all exporters and importers to settle cross-border trades in the yuan by 2011.

Before that, it announced that bilateral trades with Russia and Malaysia will begin to be conducted with the yuan and the ruble and ringgit, respectively. 

China has been gradually liberalizing its economic and financial system with respect to the outside world.  After it emerged strongly from the global financial crisis, China began to ramp up efforts to make the yuan a global currency (including pushing for its global reserve currency status).

Moreover, it's beefing up domestic financial institutions and have allowed foreign companies to issue bonds denominated in the yuan.

The efforts of the Chinese government to further enter the international financial space, combined with the ever growing size of the Chinese economy, may propelled mainland China (and a city like Shanghai) to become a major international/regional financial hub in the future.

Email Hao Li at hao.li@ibtimes.com

Click here to follow the IBTIMES Global Markets page on Facebook

Click here to read recent articles by Hao Li

 

 

 

Share this article