In an attempt to strengthen China’s economic, trade and investment exchange with foreign countries, the PRC Government announced on 4 May 2009 the launch of a RMB cross-border trade settlement pilot programme in Shanghai, Guangzhou, Shenzhen, Zhuhai and Dongguan in Guangdong Province in South China. The pilot programme will allow import and export enterprises to price contracts in RMB, residents may pay RMB to non-residents and non-residents are allowed to hold RMB deposit accounts for the purpose of international settlement.
The operation of the RMB cross-border trade settlement will impact on background clearing between domestic and foreign banks. Other than the adoption of RMB letters of credit instead of US dollar letters of credit, import and export enterprises will not feel any difference.
On 7 May 2009, Shenzhen selected 100 import and export companies, including Hong Kong-funded firms, to take part in the pilot programme for the settlement of cross-border trades in RMB.
It is viewed that RMB cross-border trade settlement may give rise to a series of problems in the fields of claims/liabilities, relationships abroad, forex management, domestic and foreign liquidation arrangement and monetary policies and also present challenges to the supervision authorities and related policies.