RMB Settlement Pilot Helps Export Textile Enterprises Development

In December 24, 2008, the State Council held a executive meeting to study and deploy policies and measures for invigorating circulation, expanding consumption and maintaining stable growth of foreign trade. These include: in the Guangdong and Yangtze River Delta regions, Hong Kong and Macao regions, Guangxi and Yunnan trade in goods with ASEAN for settlement of the people's currency.

Prior to that, the central government has introduced fourteen measures to support Hongkong's financial stability and economic development, allowing eligible enterprises to trade renminbi in Hongkong.

Experts predict that the RMB settlement pilot may mainly choose some enterprises with considerable bargaining power and bargaining power in the pilot area to carry out the business. Otherwise, foreign customers will not be willing to use RMB as settlement currency, especially when the RMB is still in the appreciation period, and the exchange rate risk faced by the other side will be very high.

In addition, the government is likely to introduce some supporting policies for financial institutions, allowing banks to use Renminbi to support foreign enterprises, such as providing buyer's credit to overseas enterprises.

The head of Guangdong clothing and Apparel Industry Association confirmed the prediction of the experts.

The official said that some of the export enterprises in Guangdong had adopted renminbi settlement methods before, but only limited to some enterprises with large scale, good reputation, strong product design ability and the right to negotiate.

"Now the central government has introduced this policy, which is conducive to the normalization of RMB settlement in the process of trade, while improving trade facilitation for small and medium-sized export enterprises."

"The implementation of RMB settlement pilot shows that the government is helping exporters to evade losses due to changes in the RMB exchange rate and reduce pressure on enterprises in the face of the current difficulties faced by export enterprises."

The above official reminded that the region was confined to the ASEAN region and did not involve the three major export markets of China's textile and garment industry, namely the European Union, the United States and Japan. Compared to the three major markets, the ASEAN region is only a secondary market.

According to the reporter, at present, Guangdong export textile and garment enterprises and foreign investors are mainly settled in US dollars or Hong Kong dollars.

Yang Jing: editor in charge