□ Our reporter Wu Li
The continuous appreciation of the renminbi in the past six months has brought about Exchange rate cost pressure. Following the trend, RMB settlement is accelerating as a fundamental strategy to reduce corporate exchange rate risks. Since February 4, the People’s Bank of China, the Ministry of Commerce and other six departments jointly issued the”Regarding further optimization of cross-border RMB policies to support stability The”Notice on Stabilizing Foreign Investment in Foreign Trade” will be formally implemented to promote the facilitation of higher-level trade and investment RMB settlement and further simplify the cross-border RMB settlement process.
The acceleration of RMB settlement
In 2020, the RMB exchange rate will continue to rise. The Director of the Monetary Policy Department of the People’s Bank of China Sun Guofeng introduced on January 15 that the RMB exchange rate against the US dollar at the end of 2020 will appreciate by 6.9%over the end of the previous year. The RMB appreciates about 4%against a basket of currencies.
“The continuous appreciation of the renminbi, coupled with rising raw material prices and soaring ocean freight, has continuously eroded the profits of foreign trade enterprises.” Shi Minxue, deputy general manager of the export department of Ningbo Ruyi Co., Ltd. accepts International Business Daily reporter said in an interview.
Faced with this situation, the pace of guiding RMB settlement at the national and local levels is accelerating.
As of the end of 2020, the cross-border RMB settlement amount was 4.12 trillion yuan, a year-on-year increase of 26.2%, accounting for 40.1%of domestic and foreign currencies… This was released by the Guangzhou Branch of the People’s Bank of China on January 14. Guangdong’s economic and financial data for 2020. The Guangzhou Branch has expanded the pilot program for higher-level facilitation of cross-border RMB from the Pilot Free Trade Zone to the Greater Bay Area. As of the end of 2020, 563 companies in Guangdong excluding Shenzhen have been included in the list. In 2020, the RMB will become Guangdong’s second largest cross-border settlement currency, surpassing the US dollar to become the largest cross-border settlement in the Guangdong-Hong Kong-Macao Greater Bay Area currency.
As a major foreign trade province, it is of great significance for the RMB to become Guangdong’s largest cross-border settlement currency. From a national perspective, since the domestic geographic scope of cross-border trade RMB settlement was expanded to the whole country in 2011, RMB cross-border settlement has been on the rise Fast lane, which brings benefits for companies to avoid exchange rate risks.
Especially this year, RMB cross-border settlement is”speeding up” again on the fast lane. On January 4, the”Notice on Further Optimizing Cross-border RMB Policies to Support Stabilization of Foreign Trade and Foreign Investment” was released; January 5, The People’s Bank of China and the State Administration of Foreign Exchange decided to increase the macro-prudential adjustment coefficient for domestic enterprises’ overseas loans from 0.3 to 0.5, and domestic enterprises’ overseas loans The upper limit is increased accordingly.
Industry insiders believe that, as China vigorously promotes RMB internationalization, convenient cross-border RMB settlement policies can Vigorously promote the use of cross-border RMB in more scenarios. Foreign trade companies have ushered in a favorable opportunity to promote the use of RMB settlement, which will further enhance the willingness of foreign customers to use RMB settlement.
The”Renminbi Internationalization Report 2020″ released by the People’s Bank of China shows that in 2019, the cross-border receipts and payments of RMB on behalf of banks totaled 19.67 trillion yuan, a year-on-year increase of 24.1%, meaning that RMB cross-border Using contrarian trends continued to grow rapidly, and the amount of receipts and payments hit a record high. The renminbi ranks fifth among the major international payment currencies, with a market share of 1.76%.
In addition to the favorable policy environment, China’s current promotion of RMB settlement has another favorable factor:the global willingness to hold RMB and RMB assets continues to rise. Bank of China recently released the Offshore RMB Index (ORI) for the first quarter of 2020, which shows that it benefits from relatively stable exchange rate performance and relatively With attractive asset returns and relatively stable capital markets, the intention to hold RMB assets overseas has further increased. At the end of the first quarter of 2020, the balance of RMB deposits in most offshore RMB markets increased, and foreign central banks included RMB assets in official reserve assets. US$221.5 billion, a record high.
New business format attracts attention
Looking at the”Notice” jointly issued by the six departments, there are many highlights, including support for cross-border RMB settlement in the new business format.
Affected by the new crown pneumonia epidemic, new business formats such as cross-border e-commerce have developed rapidly. The latest statistics released by the General Administration of Customs show that in 2020, new forms of foreign trade will develop vigorously. The annual cross-border e-commerce import and export is 1.69 trillion yuan, an increase of 31.1%, and it has become an important force in stabilizing foreign trade. The need for related companies to reduce exchange costs through RMB settlement is also more urgent.
Xinguang Digital Trade Research Institute Dean Lin Zhiyong said in an interview with a reporter from International Business Daily that at present, The overseas retail platform mainly collects money through the third-party payment platform credit card, and then performs foreign exchange settlement and domestic collection services in China. The new policy is conducive to cross-border e-commerce platforms to carry out RMB settlement business.
At the same time, Lin Zhiyong said bluntly that at present, cross-border RMB payments mainly meet the needs of bulk trade. With the rapid development of new business formats, cross-border e-commerce’s RMB settlement should receive more attention. At present, the main difficulty in using RMB for settlement on cross-border e-commerce platforms lies in the difficulty of pricing in RMB and the fact that foreign payment companies have not yet used RMB for settlement. Solving these problems requires relevant departments to launch a package of cross-border renminbi payment solutions, such as actively promoting Chinese payment tools abroad and encouraging foreign payment platforms to open cross-border renminbi payment functions.
Source:International Business Daily