China Expands Yuan Settlement Pilot Program

China's central bank said on June 22 that the yuan settlement pilot program in foreign trade has been expanded to cover the entire world.

The People's Bank of China (PBOC) said it had expanded where Chinese exporters can use the Renminbi to settle trade from the original Association of Southeast Asian Nations (ASEAN) and Hong Kong and Macao to the rest of the world.

It also added 18 provinces and municipalities to the program, which includes Beijing, Tianjin, Inner Mongolia, Liaoning, Jiangsu, Zhejiang, Fujian, Shandong, Hubei, Guangxi Zhuang Autonomous Region, Hainan, Chongqing, Yunnan, Sichuan, Jilin, Heilongjiang, Tibet and Xinjiang Uygur Autonomous Region.

China introduced the trial program in July 2009. Exporters in Shanghai, and four cities in the manufacturing base of Guangdong Province were the first places where foreign trade could be settled in yuan.

The move is part of the government's efforts to reduce its reliance on the U.S. dollar to avert foreign exchange fluctuations, and also to increase the yuan's international importance.

The total value of yuan-transactions between July 2009 and this May was 44.55 billion yuan (6.5 billion U.S. dollars), according to data released by the PBOC.

The central bank said in an online statement that deals settled in yuan had increased quickly and was the right time to expand the trial.