A SHENZHEN company signed a cross-border yuan trade settlement deal with a Hong Kong customer in Shenzhen yesterday as the city officially launched a pilot program to allow companies to settle imports and exports in yuan.
A subsidiary of Shenzhen’s ZTE Corp. signed a contract with Hong Kong’s Dragon Technology Distribution (HK) Ltd. agreeing to use Chinese currency to settle cross-border trade deals.
More than 100 companies from Shenzhen, together with about 100 firms from Guangzhou and another 100 firms from Zhuhai and Dongguan, have been selected to pilot the program.
“The program will avoid exchange rate risks, reduce operation costs and simplify trading procedures for us,” said Wei Zaisheng, vice executive president of ZTE.
“We believe more of our overseas customers would like to hold or accept Chinese currency in future deals.”
Seen as a major step toward eventually making the yuan a global currency, the program was first launched in Shanghai on Monday.
Before Guangzhou and Shenzhen officially launched the program yesterday, major banks — including Bank of China, China Merchants Bank and Bank of Communication — had begun conducting cross-border yuan settlement transactions for several Shenzhen firms.
Commercial banks that are allowed to provide international settlement service can conduct cross-border transactions for customers, according to the central bank’s Shenzhen office.
“The program meets the increasing needs of Shenzhen companies to use yuan as a currency for international settlement and reduce the procedures for cross-border trade,” Li Lihui, president of Bank of China, said yesterday. “It could also help banks to expand business scope, improve service and forge stronger ties with enterprises.”
Shenzhen has been leading Chinese cities in foreign trade, contributing one eighth of the country’s total exports. About 40 percent of Shenzhen’s export and import trade was with Hong Kong. The program will enhance Shenzhen’s role as a financial center and strengthen cooperation between Shenzhen and Hong Kong, vice mayor Chen Yingchun said.
Liu Minxia