China has launched the country’s first foreign currency special administrative district at a small border city in northeastern Heilongjiang province, allowing roubles to be freely circulated alongside renminbi.
Suifenhe, a booming trade hub on the border with Siberia, is China’s first territory to accord a foreign currency the same legal status as renminbi in a pilot scheme, according to the official Xinhua news agency.
The new measure allows Russian businessmen and tourists to use roubles to pay for shopping, meals and taxis.
Shops, restaurants and hotels in Suifenhe city are expected to start accepting roubles in the near future.
“Allowing the rouble to be freely circulated will help to regulate the rouble exchange market and rein in the black market,” Zhang Shimin, head of the Suifenhe branch of the People’s Bank of China, told Xinhua.
The measure would help pave the way for wider yuan-rouble exchange in the long term, experts said. It also reflects a desire to reinforce economic co-operation and increase bilateral trade ties between the two countries.
Russian citizens were granted 15 days visa-free entry to Suifenhe city beginning this month in order to bolster the booming border trade.
China’s renminbi last week overtook the euro to become the second-most used currency in traditional trade finance – letters of credit and collections – this year, second only to the US dollar, with an activity share of 8.66 per cent in October, according to the Society for Worldwide Interbank Financial Telecommunication.