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Home / Breaking News / Belt,Road business: China issues sweeping guidelines to push yuan

Belt,Road business: China issues sweeping guidelines to push yuan

ISLAMABAD -UNS : The People’s Bank of China (PBC) has announced a raft of new measures to push a greater cross-border role for the yuan that aim 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 seperate 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.

Employee compensation, remittance of profits, dividends and ‘other returns’ to investment can be in yuan for BRI investments

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. This will make it easier for domestic individuals to remit their legitimate income from overseas, and vice versa.

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. The Notice requires banks to ensure the free remittance of RMB profits, dividends, and other investment returns of overseas investors.

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.

Since the pilot programmes for RMB settlements in cross-border trade were launched in 2009, based on market-oriented principles, the PBC has been constantly pursuing policies on cross-border RMB business to meet market players’ needs, facilitate their cross-border trade and investment so as to avoid foreign exchange risks and reduce financial costs.

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