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China: China Allows Yuan Trade With Asean, Hong Kong And Macao

BEIJING, CHINA: China will allow two provinces sharing land borders with Asean member countries to trade in yuan currency to boost its exports which have been hit by the global financial crisis.

The move is part of a pilot project to allow the yuan to be used for trade with its immediate neighbours including Hong Kong and Macao, both special administrative regions belonging to the mainland, state media reported Thursday.

Yuan trade will be permitted between southwestern Yunnan province and the southern Guangxi Zhuang autonomous region and Asean, the China Daily said citing a State Council statement.

The two areas border Myanmar, Laos and Vietnam which are among the 10-member states of the Association of Southeast Asia Nations (ASEAN).

"The State Council did not give details of how and when the currency project would start," said the report which suggested that the decision could be the first step to making the yuan an international currency.

"The move will mitigate the risk of exchange rate fluctuations for Chinese exporters and their trade partners," Zhao Xijun, Renmin University finance professor, was quoted as saying.

The bulk of China's trade currently uses the U.S. dollar.

The mainland's trade with Hong Kong, Macao and ASEAN nations has been rising rapidly to reach US$402.7 billion last year, accounting for a fifth of the mainland's total trade.

Guangxi Zhuang is being developed as a land and sea gateway into Asean which has a free trade agreement China.

Its capital, Nanning, is the permanent site for the annual China Asean trade expo. (Bernama)

MySinchew 2008.12.26

 

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