SHANGHAI - China on Tuesday announced the launch of a cross-border yuan services centre near its border with Myanmar as part of moves to facilitate yuan-denominated trade with Southeast Asia.
The new financial services centre in Ruili, in the southwestern province of Yunnan, will promote exchanges between the yuan and Myanmar's kyat, according to a statement on the Ruili government's website.
Chinese exports to Myanmar totalled US$4.8 billion (S$6.076 billion) in 2011, while imports totalled US$1.7 billion, according to IMF figures. The statement added that the centre would also support the development of yuan financial products and create a mechanism for yuan cash to be transported across the border.
"The new centre will likely spur CNY-settled trade and CNY FX trading, and will perhaps lead to a broadening of the number of currencies allowed to be traded against the CNY," wrote Dariusz Kowalczyk, senior economist at Credit Agricole, in a note to clients.
China's cross-border yuan trade settlement programme was launched as a pilot scheme in 2009 and gradually expanded to cover trade between all Chinese provinces and all foreign countries.
Member countries of the Association of South East Asian Nations (ASEAN), including Myanmar, were included in the original pilot project, and Chinese imports from Southeast Asia account for a large portion of overall cross-border yuan trade settlement volume.
Reuters reported late last year that China planned to sign an agreement with ASEAN to settle trade in yuan and initiate central bank currency swaps.
China is Myanmar's largest trading partner and source of foreign investment, but investors from developed markets have recently explored opportunities there following the easing of sanctions by the United States and other countries.
Myanmar's reformist, quasi-civilian government took office a year ago, ending five decades of military rule, and has started overhauling the economy, easing media censorship, legalising trade unions and protests, freeing political prisoners and agreeing to ceasefires with a dozen ethnic rebel armies.