Daily Times

BEIJING: Chinese experts have said here that Pakistan will be a major beneficiary of China’s guideline issued on Friday for the usage of yuan.

“It is a matter of great satisfaction that China has welcomed the State Bank of Pakistan for allowing use of the Chinese Yuan for bilateral trade and investment activities.”

Experts hoped that the new measures would create a sound financial environment for bilateral economic, trade and investment cooperation between the two countries. According to Prof Lin Wan, a renowned Chinese expert, since China and Pakistan signed a bilateral currency swap agreement in 2011, bilateral monetary cooperation has been deepening between the two sides.

The Chinese side encouraged market players in both countries to use domestic currency settlement in bilateral trade and investment and welcomed Pakistan-related initiatives, he added.

The People’s Bank of China (PBC) has announced a draft of new measures to push a greater cross-border role for the yuan that aims to “contribute to opening up on all fronts”.

The measures go far beyond yuan settlement of cross-border trade. In a notice posted on its website, the PBC lists five separate measures to be pursued. The list is reproduced below.

First, all cross-border business allowed by the law to be settled with foreign exchange can also be settled with RMB by enterprises. Following the principle of serving the real economy and facilitating trade and investment, banks are encouraged to develop new financial products based on current cross-border RMB business policies, in order to improve their capacity in providing financial services, and meet market players’ real and legitimate demands for cross-border RMB business.

Second, to serve the Belt and Road Initiative (BRI) and meet the demands for cross-border RMB settlement in employee compensation, social welfare, and allowance for family remittance in individual accounts, banks can provide individuals with cross-border payment services under other current account items.

Third, to promote green development, the Notice proposes specific rules for cross-border RMB settlement on carbon emission trading by overseas investors.

Fourth, direct RMB investments by overseas investors are made much easier. The Notice further optimises relevant procedures, eliminates limitations on relevant account opening and payments, and clearly permits banks to provide relevant services to meet enterprises’ actual demands following the three basic principles of doing business.

Fifth, the RMB funds raised by domestic enterprises through issuing bonds or shares overseas can be transferred back to China whenever necessary, thus simplifying the relevant procedures and daily operations of the enterprises.

Published in Daily Times, January 14^th 2018.