Cross-border yuan trade to expand
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China will expand the trial of allowing the yuan to be used in cross-border trade settlements and build up an offshore yuan market to boost the currency's global status, a researcher at a State Council think tank said yesterday.
More cities will be allowed to participate in the cross-border trade yuan settlement trial in future to further boost the globalization of the yuan, Xia Bin, head of the financial research institute under the Development Research Center of the State Council, said yesterday in Shanghai.
"The yuan will for sure be one of the major global reserve currencies in 10 years," Xia said. "The rise of the yuan is apparent although the US dollar will still be a major global currency."
In April, the Chinese government allowed Shanghai and another four Chinese mainland cities to take part in settling cross-border trade in yuan with businesses in Hong Kong, Macau and the 10-member Association of Southeast Asian Nations on a trial basis.
Xia said the yuan's globalization can be boosted by a growing yuan bond market in Hong Kong as Chinese banks and locally incorporated overseas lenders on the Chinese mainland have issued yuan-backed bonds in the special administrative region.
"Shanghai's rise as a global financial center is in line with China's growing economy and a more powerful currency," Xia said. "It's a national strategy."
He also said the yuan's appreciation will be gradual and the daily trading band of the currency will widen slowly.
China depegged the yuan from the US dollar in July 2005 and shifted a basket of currencies which include the euro, the yen and the won. The yuan has risen 21 percent since then.
The yuan has been flat since the middle of 2008 as China stabilized the currency amid the global financial crisis.
