Trading Business In These Countries Can Be Settled Directly Using RMB

- Dec 04, 2018 -

At present, foreign traders reflect the initiative to propose the use of renminbi to pay for the buyer group, mainly from Russia, Iran, Egypt, Algeria, Venezuela and other countries with less foreign exchange or US sanctions, as well as Malaysia, Vietnam, India, Pakistan. In Japan, Japan and other countries around ASEAN or Asia, more and more European customers are willing to use the RMB as the payment currency.

trading business

The recent statement by the Pakistani central bank is undoubtedly a clearer signal.


On January 2, the National Bank of Pakistan (the central bank) issued a statement saying that the public and private enterprises in Pakistan and China are free to choose to use the renminbi in bilateral trade and investment activities. The central bank has formulated relevant regulations to promote the renminbi in trade and investment. Used in. Considering the recent development of the world and regional economies, especially the rapid development of the China-Pakistan Economic Corridor, it is expected that the renminbi-denominated trade with China will increase substantially, which is in the long-term interests of the two countries.


At present, Pakistan’s US dollar foreign exchange reserves are at a low level of around US$14 billion. Pakistan’s import trade with China has exceeded 10 billion U.S. dollars per year, and this figure is still expanding. In this case, the use of RMB settlement can help Pakistan reduce the pressure on US dollar demand and ease the risk of a continued decline in the US dollar reserve.


In recent years, the number of central bank members joining the “RMB Clearing Club” has continued to increase.


Russia

Russian President Vladimir Putin ordered in September 2017 to make the ruble the main settlement currency in all Russian port trades by 2018. At the same time, according to Russian media reports, the People's Bank of China intends to establish a PVP (payment-to-pay) payment system for the Russian ruble and China's RMB financial business, the purpose of which is to reduce the exchange rate risk in trade. Russia as China's largest crude oil importer so far in 2017, the concept of “oil RMB” has been used in the oil trading process with China.

In 2014, the United States launched a series of financial “strikes” against Russia, which led to a sharp depreciation of the Russian ruble and a recession in the national economy.


Nigeria

In August 2016, the Nigerian central bank announced that Naira was decoupled from the US dollar and exchanged with the RMB. With this as a sign, the renminbi has begun the hard currency course in Africa.

Also in April 2016, China reached a currency swap agreement with Nigeria. The Nigerian central bank deposits 65 billion yuan, and the Industrial and Commercial Bank of China deposits the equivalent of Naira. This means that the businesses or companies that have business are no longer required to exchange US dollar settlements, but can be settled directly in RMB or Naira at their domestic banks.


Iran

In 2015, the Iranian central bank announced that it would stop using US dollar settlement when trading with foreign countries and sign foreign trade contracts in currencies including RMB, Euro and Ruble.


Venezuela

On September 16, 2017, Venezuelan President Maduro said that the country has begun to use the renminbi instead of the dollar for oil pricing. Maduro then said in a live broadcast on Telesur TV: "We have used the currency basket to sell oil and all our products, we have already denominated in renminbi (oil price)."


Algeria

The Central Bank of Algeria has gradually used the RMB for bilateral trade settlement with China since 2016. Algerian central bank governor Badel Ding said that China is Algeria's largest trading partner. The use of RMB for bilateral trade settlement will reduce the use of the US dollar and the euro, reduce currency exchange losses and bank fees, which is very beneficial to Algeria.


According to incomplete statistics of non-official institutions, there are currently 28 countries and regions that can use RMB as the settlement currency. In addition, China has signed bilateral currency swap agreements with the United Kingdom, Switzerland, Brazil, South Korea and other countries and regions. According to HSBC's forecast, by 2020, half of China's foreign trade will be settled in RMB, and the proportion of RMB in the global central bank's reserve assets is expected to reach 7%; it is expected to rise further to 10% in 2025.


Finally, let me talk about the issue that everyone is most concerned about: Is it possible to refund the tax normally in RMB? The answer is: no problem.


To put it simply, it can be understood that cross-border RMB is equal to the foreign exchange rate of 1 and the operation is the same as the US dollar settlement. There is no need to worry about whether the RMB payment from Iran/Dubai can't be refunded, because the tax rebate has nothing to do with the source country of foreign exchange.


It should be noted that if the buyer uses his own RMB account in China, or pays with a branch office or office account in China, it is equivalent to domestic trade, and there is no tax refund.


Translated by Height Musical Instrument Co.,ltd News Department