Guangdong simplifies yuan trading

JIJI

The People’s Bank of China has recently started simplifying procedures for yuan-based trade settlement in Guangdong Province, according to informed sources.

An Akebono Brake Industry Co. unit in Guangzhou used the new system to send yuan to its headquarters in Japan via Mizuho Corporate Bank, the unit of Mizuho Financial Group Inc. said

Similar procedures have already been introduced in Shanghai.

On Aug. 9, the Guangzhou branch of the Chinese central bank allowed banks in the province, excluding those in Shenzhen, to introduce the new system, where firms with no records of illegal dealing are basically exempted from submitting business transaction contract documents and customs clearing certificates.

To prevent the flows of money linked to speculative investment, the banks offering the simplified service are asked to check more than 10 percent of transactions on a quarterly basis.

China started allowing yuan-based settlement in July 2009 to help firms reduce foreign exchange fluctuation risks and internationalize the yuan. In the first half, yuan-based settlement totaled 1,252 billion yuan, or 11 percent of overall trade flows.