* All companies can now settle trades in yuan-c.bank
* New measure will to internationalise the yuan
BEIJING, March 2 China boosted efforts to
internationalise the yuan on Friday by widening its trade
settlement rules to allow all firms in the country to invoice or
pay for cross-border transactions in the Chinese currency.
The central bank's announcement that the new rules will be
applied nationwide underscores the success of a 2-1/2-year trial
by Beijing to globalise the yuan, which it hopes will
one day rival the dollar and the euro as a major
trade settlement currency.
The yuan is still tightly controlled by Beijing, but Chinese
leaders say they are prepared to gradually relax their grip as
they free China's capital account, grow its financial markets,
and oversee a yuan that will be basically convertible by 2015.
China has allowed a 30 percent revaluation against the
dollar since 2005 and says it is committed to gradual reform but
has faced pressure, particularly from the United States, to lift
the yuan's value further, to remove what is perceived to be an
unfair advantage for Chinese exports in global markets.
"Companies that can settle their trades in yuan are no
longer restricted to those selected for the pilot programme,"
the People's Bank of China said in a statement.
"All registered exporters and importers can now settle their
trades in yuan."
To promote the use of the yuan internationally,
China allowed 365 firms to settle their trade in the Chinese
currency under a pilot programme in July 2009. The plan was
expanded in 2010 to cover 20 provinces and 60,000 companies.
The success of the trial led Beijing to take the scheme
nationwide in August last year, although exporters and importers
were still required to get the approval of Beijing before they
could settle trades in yuan.
Total trade settled in yuan jumped four-fold to reach 2.08
trillion yuan ($330 billion) at the end of 2011 from the
previous year, the central bank said, or about 9 percent of
China's total imports and exports for 2011.
The central bank said firms are not free of scrutiny under
the expanded scheme. Those that flouted customs, trade and
financial rules in the last two years will be put on a black
list and cannot park their trade incomes abroad, it said.
It is mostly importers rather than exporters who settle
their trades in the yuan right due to expectations that the
currency is set to rise. That leaves Beijing with an unremitting
flow of dollars into the country that could fan price pressures.