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China's yuan settlement in cross-border trade hits 1.63 trillion yuan

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URUMQI, Sept. 1 (Xinhua) -- China's cross-border trade settlements in yuan hit 1.63 trillion yuan (254.69 billion U.S. dollars) by the end of July since the program's launch in July 2009, a central bank official said on Thursday.

The People's Bank of China (PBOC), the country's central bank, has signed currency swap contracts worth 841.2 billion yuan with 12 countries and regions, Ma Delun, deputy governor of the PBOC, said at the first China-Eurasia Expo being held in Urumqi in northwest China's Xinjiang Uygur Autonomous Region.

The PBOC will continue to work with its Eurasian nation counterparts to promote settlements using the trading partners' currencies to facilitate trade and investment, Ma noted.

Last Tuesday, the PBOC announced the expansion of a yuan settlement program to include the whole nation, growing out of a pilot program previously carried out in 20 provinces, autonomous regions and municipalities.

The extension is a crucial step in boosting the cross-border use of yuan, a goal stated in the country's 12th Five-year Plan (2011-2015), and will better serve enterprises' needs and further facilitate trade and investment, the central bank said in a statement on its website.

Analysts said encouraging the use of yuan in cross-border trade settlements indicates China's ambition to push forward the internationalization of the yuan.

Despite earnest government efforts, last year's settlements in yuan, which totaled about 500 billion yuan under the current account, constituted about 2 percent of China's total foreign trade.

Currently, the Chinese currency can only flow into and out of the country freely under current accounts, but the capital account exchange remains closed, creating an obstacle for internationalizing the yuan.

China's Ministry of Commerce said Wednesday it will try to formally green light foreign direct investment (FDI) in yuan in September.

Prior to that, Xinjiang was the only region with a pilot program for making FDI in yuan.

Ma said at least 1.1 billion yuan in FDI had been made in yuan in Xinjiang by the end of July.

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