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A customer holds renminbi banknotes at
an ATM in a bank in Beijing, Nov 26, 2008.(Xinhua Photo)
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BEIJING,
Dec. 25 -- The yuan will be used in transactions with neighboring trade partners
as part of a pilot project - in what could be the first step on the road to
making it an international currency.
The yuan will be allowed to be used for settlement
between the Pearl and Yangtze river delta regions and the special administrative
regions of Hong Kong and Macao, the State Council, or the Cabinet, said in a
statement yesterday.
The Guangxi Zhuang autonomous region and Yunnan
province will be allowed to use the yuan to settle trade payments with ASEAN
(Association of Southeast Asian Nations) members.
The pilot program was announced with a raft of other
measures designed to help bolster the nation's export sector. The State Council
did not give details of how and when the currency project would start.
"The move will mitigate the risk of exchange rate
fluctuations for Chinese exporters and their trade partners," said Zhao Xijun,
finance professor at Renmin University of China.
The lion's share of China's foreign trade is
currently settled in US dollars or the euro. But many analysts predict the
greenback might depreciate substantially in the coming years because of the
ailing US economy.
Earlier this month, Zhou Xiaochuan, governor of the
central bank, said in Hong Kong that settlements using the US dollar would cause
problems if the dollar's value fluctuates drastically.
The mainland's trade with Hong Kong, Macao and ASEAN
nations has been rising rapidly over the past years to reach $402.7 billion last
year, or 20 percent of the mainland's total trade volume.
"The move will also increase the yuan's acceptance in
Asia, which will help it become an international currency in the long run," said
Zhao.
The yuan's acceptance has been rising in recent
years, thanks to the nation's economic prowess and its $1.9 trillion reserves of
foreign exchange. Over the past year, there has been a growing advocacy at home
to make the yuan a global currency, since the weakening of the greenback has
caused hefty losses to China's forex reserves.
But the government has been cautious about moving in
that direction, which would also require the yuan to be freely convertible.
Analysts say it will take time for policymakers to make the shift as they try to
maintain the stability of the currency regime.
The government has made a series of moves in recent
months to expand the use of the yuan beyond its borders, which some say would
benefit its slowing export sector.
The mainland signed a currency swap deal with Hong
Kong on Nov 20. Earlier this year, the government also gave the go-ahead to let
Chinese banks issue yuan-denominated bonds in Hong Kong.
(Source: Chinadaily)
Senior official: Renminbi likely to be
used as currency for forex reserves
BEIJING, Dec. 25 (Xinhua) -- China's currency, Renminbi,
is likely to join other international currencies to be used for forex reserves
by other economies, according to Wu Xiaoling, former vice governor of the
country's central bank and now the deputy head of the financial and economic
committee under the top legislature.
Wu made the remarks in her article carried by the latest
annual issue of the leading business magazine Caijing. Full story
China to take measures to spur
consumption, stimulate foreign trade
BEIJING, Dec. 24 (Xinhua) -- More measures will be
taken to stimulate consumption and support foreign trade, according to
Wednesday's executive meeting of China's State Council, or the
cabinet.
A document released after the meeting, chaired by Premier
Wen Jiabao, said to stimulate domestic consumption, efforts should be made to
improve the rural circulation network, increase the variety of commodities
available in rural markets, improve urban community service-facilities, promote
upgrade of durable goods, support development of circulation companies,
stimulate holiday consumption through exhibitions, and step up supervision over
product quality and safety. Full story
