Currently 853 enterprises in Sichuan are eligible for RMB settlement in export trade deals. The Department of Commerce of Sichuan Province said enterprises taking part in the trial scheme may use RMB in settling cross-border trade deals from December 3, and may enjoy export tax rebate if they go through customs declaration formalities according to relevant regulations. These enterprises are from competitive sectors like machine manufacturing, high technology, textile and garment and food processing, involving foreign trade companies with big orders in hand.
In order to be eligible for RMB settlement, Li Jingsong has been to the Department of Commerce for several times. His company now has trade contracts worth RMB 300 million. But the EURO has depreciated by 13% against RMB over recent years. And now that profits have been diminished by the increasing prices of domestic raw materials, Li has to say no to more orders.
Before this, most Sichuan enterprises would use USD and EURO for settlement of trade deals. In the memory of Rao Tinghu, Jin Wei Li s General Manager, loss due to exchange fluctuation for the company in September this year was hundreds of thousands yuan more than that in August. RMB settlement can help enterprises win more orders and therefore expand production , Rao said.
The Department of Commerce said companies with RMB foreign trade settlement may use RMB in customs declaration, and don t need to present exchange settlement bills when going through customs declaration and getting export tax rebate. Such simplified formalities are especially significant for Sichuan, which is an inland province.
China has made bilateral currency swap agreements of RMB 650 billion with 6 countries and RMB cross-border settlement has extended to all countries and regions that are willing to accept RMB-denominated deals. And the government has recently entered into agreements with Russia for using local currencies to settle trade deals. Currently, 16 commercial banks in Sichuan Province offer RMB settlement services. All the above contribute favorably to enterprises taking up RMB settlement.
