One-third of trade to be in yuan by 2015

It is expected that over one-third of all Chinese overseas trade will be conducted in the yuan by 2015, according to a survey of 692 mainland enterprises by HSBC, which experts say indicates the promising future of the currency as a major global trade currency.

The HSBC report, released Wednesday, also showed that 72 percent of respondents intend to use the yuan in their trade to help manage their foreign exchange risks, a sharp increase from 49 percent last year.

The yuan's growing role is primarily attributable to Beijing's efforts to promote the global use of the currency, which will help protect trade-oriented firms from foreign exchange risk, experts told the Global Times.

The country's trade settled in yuan in the first nine months of 2012 totaled $227.37 billion according to the People's Bank of China, while the Ministry of Commerce put China's overall trade for the same period at $2.84 trillion. Based on these figures, Chinese trade settled in yuan accounted for just 8 percent of overall trade.

The Chinese government has quickened its pace in rolling out policies to encourage the yuan's global use in the past year, including increasing the yuan's exchange rate flexibility and yuan-denominated overseas investment. This gives overseas companies more incentive to hold the yuan and use the currency to settle business with their Chinese mainland counterparts, said Liang Yanfen, director of the department of world economy and trade studies of the Chinese Academy of International Trade and Economic Cooperation.

Domestic trade-driven manufacturers, who convert dollars from cross-border transactions into the yuan for home use, are more inclined to conduct their trade directly in yuan to minimize the currency exchange risks, Liang said.

While agreeing with Liang's views, Ma Tao, an economist from Beijing-based Renmin University of China, also expressed concern that the international use of the yuan may expand too quickly. He said Beijing needs to establish a well-developed monitoring system to prevent the arbitrage of the Chinese currency that global currency investors wish to profit off.