Yiwu launches cross-border yuan settlement pilot scheme

Self-employed businessmen have welcomed a pilot scheme to promote cross-border yuan settlement in Yiwu, East China's Zhejiang Province, as the scheme could help them avoid risks brought about by fluctuations in the yuan's exchange rate, a local industry leader said Wednesday.

People will only need to present their ID card if the amount of a single cross-border transaction is less than 500,000 yuan ($81,600), the 21st Century Business Herald reported Wednesday, citing an unnamed account manager at a local commercial bank.

For transactions worth more than 500,000 yuan, individuals will have to provide documents such as purchase contracts or customs declaration forms to prove the authenticity of the trade, the report said.

Domestic residents are only allowed to convert the yuan equivalent of $50,000 into foreign currency every year, according to current rules made by the State Administration of Foreign Exchange.

"It's good news for the city's large number of self-employed people, as they can avoid risks brought about by the rising value of the yuan," Chen Jinlin, secretary-general of Yiwu Christmas Products Industry Association, told the Global Times Wednesday.

There were 164,683 self-employed businessmen in Yiwu by the end of 2012, accounting for 80 percent of the city's market entities, data from the Yiwu Administration for Industry and Commerce showed.

The Yiwu branch of China's central bank aims for the pilot program to involve trade worth 3 billion yuan in 2013, according to the city government's website.

"The pilot program aims to simplify procedures for self-employed businessmen, as the external trade situation is not good this year," Liu Dongliang,

a senior currency analyst at China Merchants Bank Co in Shenzhen, told the Global Times Wednesday.

"But whether the pilot program can achieve the targeted scale will also depend on foreign clients' willingness to use the yuan for cross-border settlement," he said.

On December 28, Yiwu, which is known for its international trade in small commodities, became the first city in China to get preliminary approval from the central bank to launch a pilot scheme allowing local residents to use the yuan to settle cross-border business.

Guo Jianwei, deputy director-general at the monetary policy department of the central bank, said at a forum on May 6 that the authorities hope to expand the Yiwu pilot scheme throughout the whole country.