Jan. 7 – The People’s Bank of China announced that it would test a program that would allow the use of the Chinese currency instead of the U.S. dollar for settling overseas trade.

China will allow the yuan to be used for trade cases between Guangdong Province and the Yangtze River Delta as well as the special administrative regions of Hong Kong and Macau.

Exporters based in the Guangxi Zhuang Autonomous Region and Yunnan Province will also be allowed to use the yuan for trade settlements payments with member countries of the Association of Southeast Asian Nations.

Analysts told Shanghai Daily that the moves are expected to facilitate overseas trade because Chinese exporters could incur more losses if they continue to be paid in US dollars.

Since the beginning of the credit crisis last year, the US dollar’s exchange rate has become unstable.

“We’ll actively join international efforts to tackle the global financial crisis while safeguarding national interests,” the central bank said in a statement.

The central bank said it would expand financial cooperation with overseas economies and properly deal with the global financial crisis.
It added that it would make the exchange rate of the yuan more flexible at a stable and balanced level.