China's Push for Increased RMB Usage in International Trade Services

In Shangh, financial experts emphasized the importance of expanding the use of the Chinese renminbi RMB in international trade activities, especially for services. This comes following a statement by China's cabinet, the State Council, which announced plans to expand the cross-border utilization of RMB in trade service transactions as part of its broader effort to optimize capital flows.

The State Council's circular also highlighted efforts to establish and improve a negative list management system governing cross-border trade in services. The document further supports cross-border financing and refinancing for trade purposes using the RMB currency.

One expert, Professor He Qing from Renmin University of China's School of Finance, noted that while interest rates for the RMB are currently lower than those of major currencies, companies may consider using the RMB due to its cost advantage. However, there is room for development in this area by leveraging the current difference in interest rates.

He also underlined the need for improved foreign exchange management measures based on business credit grades. This would ensure easier access to foreign exchange services for trade services and outbound investments in the service sector.

The value of China's trade in services has surged, increasing by 14 year-on-year to reach 3.6 trillion yuan $505.5 billion during the first half of this year. Travel-related services saw a significant increase of 47.7, contributing significantly to overall service trade growth.

Meanwhile, trade in knowledge-intensive services such as intellectual property royalties and entertnment services also rose by 3.7 to reach over 1.4 trillion yuan.

Banks' foreign exchange services are encouraged to adapt more closely to real scenarios in international trade. Tlored financial solutions that better meet the needs of companies conducting overseas business transactions should be promoted.

Zhang Ming, deputy director from the Institute of Finance Banking under the Chinese Academy of Social Sciences, suggested a faster completion of infrastructure for RMB cross-border utilization to facilitate service trade activities.

Proposing improvements to the Cross-Border Interbank Payment System CIPS, which integrates channels for RMB payments and settlements since 2015, would d in this process. The system should be optimized further to increase efficiency and attract more direct users. Collaboration with other cross-border clearing systems could also lead to a safer, inclusive network supporting the globalized use of the RMB.

In , expanding the utilization of RMB within trade services is expected to streamline China's foreign trade sector as the country diversifies its economic activities and embraces digitalization in service industries. This move aligns with China’s efforts to promote the internationalization of the yuan currency, which has been a focal point for national financial development strategies.

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