BEIJING: Pakistan along with other Belt and Road Initiative (BRI)countries ditching US dollar for Chinese Yuan in trade, it has beenrevealed.
The Belt and Road Initiative (BRI) has fueled the yuan’sinternationalisation, particularly in the past two to three years as workon related projects accelerated.
Pakistan is also among those countries that have opened the door tosettling all bilateral trade with China in yuan instead of the UnitedStates (US) dollar.
According to the State Bank of Pakistan (SBP) there is no bar to using theyuan to settle payments for trade and investment from China.
In Southeast Asia where economic relations with China are closer than inother countries and regions the yuan usage is getting popular, one experttold the Chinese Media House, the *Global Times*.
However, he said that relatively strict foreign exchange policies in manyBRI markets, as well as insufficient branch network of domestic financialinstitutions in those markets, are restricting the yuan’sinternationalisation in the short term.
“On the positive side, the growing pace of yuan use in BRI countries hasbeen faster than the yuan’s overall usage in the world in recent years. Thetrend is particularly evident in some Southeast Asian countries likeSingapore,” said Zhou Yu, the director of the Research Center ofInternational Finance at the Shanghai Academy of Social Sciences.
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The change is taking place very “naturally” as local companies graduallyaccept yuan settlement in their increasingly active business interactionwith Chinese companies. This trend is also facilitated by rapid businessexpansion of Chinese banks in BRI countries, he said.
According to a statement the Bank of China, it has set up 12 offshoreyuan-clearing banks, some of which are located in BRI countries likeMalaysia. It is also helping local companies use the yuan for businesssettlement in countries along the routes of the BRI.
“As a Chinese company, we of course want to settle balances in yuan, whichwould help us avoid many exchange rate risks,” Fu said.
But Zhou cautioned that the strict foreign exchange policies in BRIcountries, which are in general tighter compared with the developedcountries, will hinder the yuan’s internationalization.
