In 2017, Pakistan exported goods and services worth more than US.6 billion to China, and imported US.57 billion. The Chinese currency will be on a par with other international currencies such as the US dollar, euro and Japanese yen.
Karachi (AsiaNews) – China and Pakistan have agreed to use the yuan in bilateral trade, the State Bank of Pakistan (SBP) in Karachi has announced.
The new regulatory framework – including the opening of letters of credit, clearing of transactions and financing facility in the yuan – is in place.
Imports, exports and financial transactions between the two countries can now be denominated in the yuan, which is set to boost economic ties with China, the SBP said in its press release.
This puts the yuan on a par with other international currencies such as the US dollar, euro and Japanese yen.
Both Pakistani and Chinese public and private sector enterprises are free to choose yuan for bilateral trade and investment activities.
In recent years Pakistan has become one of the major beneficiaries of Chinese investment.
China has extended a US billion financing facility to the China-Pakistan Economic Corridor as part of its ‘One Belt, One Road’ (OBOR) initiative, which includes building a ring of ports, highways and railways to bring Chinese goods to the heart of Europe.
Pakistan’s Minister for Planning and Development Ahsan Iqbal had already said on 19 December 2017 that his government was considering the Chinese proposal to use the yuan.
The two countries have yet not finalised a free trade agreement (FTA), but the SBP had signed a Currency Swap Agreement (CSA) with People’s Bank of China (PBoC) in 2012, thus allowing banks to accept deposits and give trade loans in yuan.
In Fiscal Year 2017, Pakistan exported goods and services worth US.62 billion to China, whilst its imports from China reached a record US.57 billion.