will start a trial plan to settle cross-border trade using the yuan "in the near term" as part of its initiatives to become a major international financial and shipping center by 2020.

 

This and other local pilot projects for innovations in finance and shipping could pave the way for similar measures nationwide.

 

The pilot run is expected to help stabilize trade and trim exporters' currency exposure while building the yuan's position in the US-dollar-dominated international monetary system.

 

The Shanghai branches of the Bank of China and the Bank of Communications have finished system tests for the program, including checks of clearing agreements with overseas banks.

 

The State Council authorized the yuan settlement trial in four cities in Guangdong Province and Shanghai earlier this month.

 

China, in seeking to promote the yuan as an international currency, has signed 650 billion yuan (US$95 billion) in swap agreements with Argentina, Indonesia, South Korea, Malaysia and Belarus in the past months.

Also under yesterday's guidelines, overseas companies were encouraged to sell yuan-denominated shares and bonds in Shanghai.

 

The special administrative region is ahead of Shanghai in terms of market openness, internationalization, product diversity and scale. Shanghai is already the world's second biggest port in terms of container throughput.

 

To further boost growth, China plans to exempt shipping companies that are registered in the Yangshan Deep-Water Port from paying business tax on their international shipping revenue.

 

Meanwhile, Shanghai-registered insurers don't have to pay business tax on income derived from their international shipping insurance operations.

 

Source: Shanghai China

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