The People’s Bank of China and six ministries published the Expansion of the Pilot Scheme for Cross-border Trade Settlement in RMB Notice on 17 June, which expands the pilot scheme launched in July 2009 to more areas both inside and outside China:
- outside the mainland of China, the scheme will be extended from Hong Kong, Macau and ASEAN to all countries and regions in the world;
- inside China, it will be expanded from Shanghai municipality and four cities in Guangdong province to the whole of Guangdong province as well as to 18 other provinces and autonomous regions and municipalities directly under the central government, covering Beijing, Tianjin, Inner Mongolia, Liaoning, Jilin, Heilongjiang, Jiangsu, Zhejiang, Fujian, Shandong, Hubei, Guangxi, Hainan, Chongqing, Sichuan, Yunnan, Tibet and Xinjiang. Enterprises in these 20 areas can carry out settlement in RMB for the trading of imported goods and cross-border services and for other current account items pursuant to the Pilot Scheme for Cross-border Trade Settlement in RMB Administrative Measures.
In addition, as to RMB settlement for trading of exported goods, the Notice states that the pilot scheme is to be extended to 16 provinces, autonomous regions and municipalities directly under the central government except for Jilin, Heilongjiang, Tibet and Xinjiang among the aforementioned 20 areas. However, companies that conduct RMB settlement for exported goods trade will need to be approved as pilot companies.
Cross-border trade settlement in RMB carried out pursuant to the Pilot Scheme for Cross-border Trade Settlement in RMB Administrative Measures published in 2009 is conducive to facilitating trading and minimizing the risks arising from fluctuation of exchange rates incurred by Chinese export enterprises, and represents an important first step towards the internationalization of the RMB.
