As the renminbi charts its course to becoming a fully convertible currency, the first stage of the journey is in using the renminbi to pay for trade transactions. ‘Exponential’ is often used to describe the rate of growth in the use of the renmimbi in trade payments. However, in recent months the trade settlement statistics have dampened some of the optimism on how quickly the renminbi will become internationalised.
The process of opening up renminbi for trade has been done in stages by the Chinese authorities and now, if the transaction has genuine trade underlying it, there are few restrictions on using the Chinese currency for companies outside China. Payments began in July 2009 when cross-border renminbi settlement was introduced to five pilot cities in China that were allowed to settle with companies in Hong Kong, Macao and members of the Association of South-east Asian Nations. In June 2010, that pilot was expanded to 20 provinces in China and some international companies, as long as the banks involved were licensed under the cross-border settlement scheme. In August 2011, the Chinese central bank extended the scheme to include all areas in China.
