A woman rides past the People’s Bank of China headquarters in Beijing. The Chinese are urging Pakistan to expand the role of the yuan in the economy from trade and investment payments to reserve currency, and even asking for it to be made a legal tender in Gwadar, a demand that has not yet been accepted.—Reuters
A woman rides past the People’s Bank of China headquarters in Beijing. The Chinese are urging Pakistan to expand the role of the yuan in the economy from trade and investment payments to reserve currency, and even asking for it to be made a legal tender in Gwadar, a demand that has not yet been accepted.—Reuters

KARACHI: 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.

Published in Dawn, January 12th, 2018

Now you can follow Dawn Business on Twitter, LinkedIn, Instagram and Facebook for insights on business, finance and tech from Pakistan and across the world.

Opinion

Editorial

Mianwali raid
Updated 02 Feb, 2023

Mianwali raid

The military needs to share intelligence with civilian agencies to neutralise the militant menace nationwide.
Corruption unlimited
02 Feb, 2023

Corruption unlimited

PAKISTAN’S consistent slide on Transparency International’s Corruption Perceptions Index over the last several...
Women police officers
02 Feb, 2023

Women police officers

IN a heartening development, a second female police officer has been appointed as DPO in Attock, weeks after the...
Road to perdition
Updated 01 Feb, 2023

Road to perdition

This is also the time of reckoning for those who sowed the seeds of a disastrous policy against militants.
Transport tragedies
01 Feb, 2023

Transport tragedies

TWO tragedies over the weekend illustrate the weak protocols governing the safety of transport in Pakistan. In fact,...
Disqualifying Jam Awais
01 Feb, 2023

Disqualifying Jam Awais

IT appears that there may be some kind of small punishment after all for PPP lawmaker Jam Awais, who was pardoned ...