2010/08/26

China hopes for wider yuan use in Southeast Asia

DANANG, August 26, 2010 (AFP) - China said Thursday it hoped for wider use of its currency in trade with Southeast Asian nations, but the head of the regional bloc said countries would need time to gain confidence in the yuan.

"We are looking at the possibility of trade settlement in yuan or (ASEAN countries') own currencies" within the framework of a free trade deal that took effect this year, said Chinese Commerce Minister Chen Deming.

"We hope to settle trade with ASEAN countries in (their) own currencies or in yuan if everybody is willing to do so," he said on the sidelines of annual talks with his counterparts from the 10-member Association of Southeast Asian Nations (ASEAN).

Surin Pitsuwan, ASEAN's secretary general, told reporters that a move to the yuan "cannot be just wished and happen" and would require a gradual process of establishing confidence.
"It took dollars a few years. It took yen a few years," he said.

Analysts say China is stepping up efforts to increase overseas use of the yuan as the nation seeks to reduce its exposure to the US dollar and allow its currency to take on a greater global role.

In the past two years, China has signed currency swap arrangements with several nations and launched trials for yuan trade settlement with a number of mainly Southeast Asian countries.

"We will organise a seminar specialising in the study of this issue at an appropriate time," Chen said. "It will facilitate our cooperation on regional currencies."

Despite the global success of Chinese exporters, the yuan plays only a minor international role because of restrictions on exchanging it for other currencies. Official controls make it difficult to move the yuan in and out of China.

The ASEAN-China Free Trade Area, which took effect earlier this year, is the world's biggest by population, with a market of 1.7 billion consumers.