More than half of China’s total trade will be settled using the Chinese currency, yuan, by 2020, which would be more than double the present level, Stuart Gulliver, HSBC chief executive officer, said during a forum held in Hong Kong on March 26, Thursday.
The Beijing Times reported that the yuan settlement of trade grew rapidly in the past years, after the scheme was launched in 2009 aimed at encouraging cross-border trade settlement in five Chinese cities.
Since then, settlement of trade using yuan has risen from 1 percent of transactions in 2010 to 22 percent last year, the report added.
According to Gulliver, the use of yuan in trade settlement is due to the demand and confidence of the currency, which has remained stable and unaffected, despite its quick depreciation earlier this year.
Last year, the yuan dropped 2.4 percent against the dollar until China's central bank apparently intervened to help it get back to stability, the report said.
However, the report added that China's trading partners have not yet reached the level to be able to dominate the trade, and Hong Kong still takes much of the settlement and the rest are conducted in other places in Asia.
"In this sense, the renminbi (yuan) is not yet as integrated as a trade currency as it both could be and will be. We do expect this to change," Gulliver was quoted as saying.
According to SWIFT, a global transaction services organization, the yuan is already one of the top five currencies used in international payments, surpassing both the Australian and the Canadian dollars.
The yuan is expected to become a more practical alternative to the U.S. dollar and finally serve as main reserve currency similar to the U.S. dollar and the euro.