China allows Yuan trade settlement, offers sops

China’s central bank allowed companies to undertake settlement of cross-border trade in the yuan and promised tax breaks, seeking to reduce the reliance of importers and exporters on the US dollar. The People’s Bank of China will encourage banks to offer yuan settlement services from Thursday, the bank said in the regulations published on its Web site. Transactions inside China will take place in Shanghai and four cities in the southern Guangdong province, while those outside of China will occur in Hong Kong, Macau and the Association of Southeast Asian Nations, it said. “Companies in China and neighboring countries are facing relatively huge risks of exchange-rate fluctuations because of big swings in the US dollar, the euro and other major settlement currencies,” the central bank statement said. China is promoting greater... [read full story]                    

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