Export companies in Yunnan are hoping a new cross-border renminbi currency settlement regime will protect them from the higher costs and uncertainty of today's dollar-denominated system.

"We sell 50 percent of our vegetables to countries like Malaysia, Thailand, Singapore and the Philippines, with an annual export volume totaling 50 million yuan," Huang Fengmei, chief accountant of Kunming-based Chennong Green Products Co Ltd, told China Daily.

"But the dollar-based settlement mechanism is always a problem for us. We have suffered considerable losses because of exchange rate fluctuations."

"We hope the trade can be settled with renminbi, which is better for us to avoid risks," she added.

Huang's hope is closer to reality with the founding on Tuesday of a Yunnan cross-border settlement center and center for cross-border trade, which were announced on the sidelines of the Dianchi forum in Kunming.

Representatives of domestic and foreign banks have now signed renminbi settlement agency agreements to facilitate the new clearance system.

According to Yunnan Vice-Governor Gu Zhaoxi, renminbi settlement has been used informally in trade along the border for the past years.

"Ninety percent of the border trade has been settled with renminbi, showing wider acceptance of the Chinese currency among traders," Gu said.

Shanghai and Guangdong first pioneered renminbi settlement a year ago.

On June 17, the People's Bank of China - the country's central bank - the Ministry of Commerce, the General Administration of Customs, the State Administration of Taxation and China Banking Regulatory Commission jointly issued a document that described plans to expand renminbi settlement in 20 provinces, municipalities and autonomous regions including Yunnan.

China Daily

(China Daily 07/29/2010 page18)