Yuan trades will take a while to catch on

Beijing's pilot scheme to allow firms in southern and coastal provinces to settle cross-border trades with Southeast Asian nations will give traders more financial flexibility, but it will take time to gain popularity, according to the financial head of Asia Cassava Resources Holdings.

Chief financial officer Shum Shing-kei said the company has been granted an award from Bank of China (Hong Kong) for being a pioneer in using yuan for settling trades between China and the 10-nation Association of Southeast Asian Nations through the bank.

Asia Cassava has sent several million yuan from its mainland office to its Thailand unit in November through the pilot programme. But Shum said the 'real' cross-border yuan operation has yet to start.

'The scheme will allow us to do business with potential mainland customers who currently do not have access to US dollar letters of credit issued by mainland banks to help them pay for imports,' Shum said.

The company settles trades with mainland buyers in US dollar and those with Thai suppliers in baht. But Shum expected the amount of yuan trade will be limited by the interest of Thai customers and their banks.