The bulk commodity trading center in China (Zhejiang) Pilot Free Trade Zone is pictured in Zhoushan, East China's Zhejiang province [Photo/WeChat account: china-zjftz]
China (Zhejiang) Pilot Free Trade Zone (FTZ) in Zhoushan, East China's Zhejiang province recently reported total cross-border trade settled in renminbi hitting 100 billion yuan ($14.9 billion) for the first time since the zone was established two years ago.
According to statistics from the People's Bank of China (PBOC) Zhoushan Downtown Sub-branch, the zone's cross-border RMB settlement totaled 3.8 billion yuan in 2017 and 72.7 billion yuan in 2018. In the first quarter of this year, the amount reached 23.6 billion yuan, a nearly four-fold year-on-year increase. Zhejiang FTZ now ranked second in the province in the aggregate cross-border RMB settlement.
The figure represents a significant achievement for the zone in its efforts to help internationalize the renminbi for cross-border trade in bulk commodities, which is one of its key development goals.
Indeed, internationalization of the renminbi is one of China's central economic objectives.
Zhejiang FTZ has dedicated itself to financial reforms and innovations over the past two years and has pioneered some advanced financial practices. For example, it has operated a warehouse receipt financing business for bulk commodities, the first ever in a Chinese FTZ.
Major State-owned banks play a leading role in Zhoushan's cross-border RMB settlement. With the support of the PBOC Zhoushan Downtown Sub-branch, the zone launched a cross-border two-way RMB capital pooling business last year and provided private companies with easier access to financing.
In addition, the PBOC Zhejiang and Zhoushan branches encouraged financial institutions to offer mortgage financing based on special assets held in the zone, such as bonded fuel oil tanks and wharves, and supported bulk commodity traders to expand the scope for RMB settlements in the hope that more of the Chinese currency will flow back into China. A total of 39.3 billion yuan has so far come back to the zone.
