On 22 June, 20 provinces (autonomous regions and municipalities) including Sichuan became the trial zones of RMB settlement in cross-border trades. On the same day, Bank of China Sichuan Branch took the lead in successfully handling the first RMB settlement outward remittance in cross-border trades for Sichuan Zhenxi Petrochemical Kits Equipment Co., ltd and Sichuan Xinlixin IMP.& EXP. Co., ltd.
"Circular on the Issues of Expanding the Pilots of RMB Settlement in Cross-border Trades", jointly released by the People's Bank, the Ministry of Finance, Ministry of Commerce, the General Administration of Customs, the State Administration of Taxation and the China Banking Regulatory Commission, expanded the scope of RMB settlement trial in cross-border trades. After the expansion, the trial zones of RMB settlement in cross-border trades have been expanded from 4 cities including Shanghai and Guangdong to 20 provinces (autonomous regions and municipalities) including Beijing, Tianjin, Inner Mongolia, Liaoning, Shanghai, Jiangsu, Zhejiang, Fujian, Shandong, Hubei, Guangdong, Guangxi, Hainan, Chongqi, Sichuan, Yunnan, Jilin, Heilongjiang, Xizang and Xinjiang.
According to the Circular, the business scope of the pilots includes RMB settlement in cross-border trade in goods, services and other current accounts. The overseas regions involved in RMB Settlement in cross-border trades are no longer restricted but expanded from Hong Kong, Macao and the ASEAN region to all countries and regions. Enterprises can choose to settle in RMB to the need of market.
RMB settlement will help foreign trade enterprises to avoid exchange rate risk, to lock trade costs and benefits in advance and to reduce exchange, handling charges and other transaction costs in the process of settlement, thus achieving savings in their accounts.
In March of this year, in order to trial RMB settlement in cross-border trades, Bank of China Sichuan Branch opened the first RMB import letter of credit of 3.05 million yuan for Sichuan Mike Biotechnologies Co., Ltd and external payment was successfully made. This is the first RMB import letter of credit opened by the PRC banking industry and received in German and even Europe, which lays a foundation for the official launch of RMB settlement in cross-border trades.
