China to relax rules on cross-border yuan use, as currency hits 30-month high against US dollar
- New rules to kick in on February 4 will make it easier for individuals, investors and companies to settle in yuan internationally
- Policy shift comes after yuan rally continues into 2021, with Beijing aiming to prevent the currency from becoming overvalued
Beijing will make it easier for traders, multinational companies and outbound investors to use the yuan in international transactions, after the Chinese currency rallied to a 30-month high against the US dollar.
The new rules, which take effect February 4, will cut red tape in yuan trade settlements, simplify paperwork and streamline the ability of Chinese citizens to move money out of the country, according to a circular jointly released by the People‘s Bank of China and five other government agencies on Monday.
When foreign companies invest in China or make payments for domestic mergers and acquisitions, the funds can be transferred directly, rather than via a special bank account, according to the new rules. Beijing will also set up a pilot programme to facilitate foreign fund remittances and cross-border yuan settlements for approved contractors.
Chinese banks will be allowed to open yuan accounts for Hong Kong and Macau residents, with a remittance limit of up to 80,000 yuan (US$12,386) per day, provided sums are used solely for domestic consumer spending.
01:16
Is China a currency manipulator?