HSBC: China To Settle Most Trade in Yuan By 2015!
- The world is rapidly doing away with the USD for international trade settlement. The only hold out is the petrodollar oil trade. Middle East oil nations (with the exception of Iran) dare not abandon the USD for oil trade. They know abandoning it will result in war and the Anglo-American empire!
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HSBC: China to settle most trade in yuan by 2015
By Jean Yung
SHANGHAI -(MarketWatch)- More than half of China’s trade, or about $2 trillion, is expected to be settled in yuan by 2015, according to Montgomery Ho, head of commercial banking at HSBC China. Ho’s comment comes as a HSBC survey of its commercial banking customers in mainland China revealed domestic businesses are eager to start settling trades in yuan.
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Nearly eight in 10 companies in mainland China that have yet to use the yuan to settle cross-border trades are planning to use it some time in the future, according to the survey released Sunday. About 45% of the 1,300 companies surveyed said they plan to settle some trades in yuan in the next year, while 33% said they would consider using the yuan depending on pricing or services offered by banks. The remaining 22% of businesses said they have no plans to switch to yuan.
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Businesses said the major obstacle to switching to settling in yuan is its acceptability outside of China. Overseas firms find it difficult to secure yuan to pay for goods and have too few channels to use the yuan they receive as payment, the survey found. A lack of support from banks and knowledge about the yuan also pose problems.
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Of the companies who have started using the yuan for trade settlement, 49% said they do so to hedge foreign exchange risk, while 44% said the yuan’s long-term appreciation was the reason, the survey showed.
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A small but growing volume of the country’s foreign trade is now denominated in yuan as China promotes the use of its currency internationally. China began to allow the yuan’s use for cross-border trade on a trial basis in 2009, and the program is expected to be rolled out nationwide this year.
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Chinese banks handled CNY360.3 billion in cross-border yuan-based trade in the first quarter, accounting for about 7% of total foreign trade. Last year, China recorded just CNY506.3 billion in yuan trade settlements, or 5.7% of foreign trade.
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