Using Yuan to yield long-term benefit to Pakistan

BEIJING: Venturing to replace the US dollar with the Chinese yuan for bilateral trade

will yield long-term benefit to Pakistan.

A comprehensive bank policy was prepared whereby public and private enterprises in both countries can carry out financial activities in the Chinese Yuan (CNY), says a Chinese media’s report on Thursday.

From now on, Pakistan's imports from China can be paid for in yuan rather than dollars. Not only that, Chinese companies investing in projects related to the China Pakistan Economic Corridor (CPEC) can bring in yuan-denominated funds that will yield profits in yuan.

This facility is also available to non-Chinese companies involved in the CPEC. Additionally, the Industrial and Commercial Bank of China Ltd. (ICBC) in Pakistan has initiated a local yuan settlement and clearance arrangement so that yuan accounts can be opened to facilitate remittances and yuan-based transactions.

As a policy, the Long-Term Plan of the CPEC for 2017-30 visualizes the strengthening of financial bonds between the "all-weather strategic partners" by giving the yuan equal status to the dollar in Pakistan.

Only recently, Minister for Planning and Development Ahsan Iqbal and the Chinese Ambassador Yao Jing formally announced the long-term plan of the CPEC along with other measures to complement it. Financial co-operation between free trade zones will be increased and the formation of a RMB backflow mechanism will be facilitated.

Describing China's long-term commitment, Ambassador Yao said there was room for improvement in the LTP if needed, "By no means is the LTP final and perfect, as it can be adjusted according to the ground realities."