Breakthrough in Cross-border Renminbi Business

China's cross-border renminbi payments have climbed sharply this year，aided by the Belt and Road Initiative，a key infrastructure and trade development program. More than 200 countries and regions have taken part in these transactions and in the first quarter，the cross-border renminbi receipts and payments reached 3.15 trillion yuan，an increase of 87.1% over the same period last year. Actual receipts were 1.65 trillion yuan，up 113%，while payments were 1.5 trillion yuan，for a gain of 65.4%.

Cross-border renminbi receipts and payments under the current account amounted to 1.06 trillion yuan in the first quarter，up 6.5% over a year ago. Receipts and payments related to merchandise trade reached 797.05 billion yuan while those in the services trade and other items reached 261.93 billion yuan. Cross-border renminbi receipts and payments under the investment account were 2.09 trillion yuan，more than double the year ago. The scale of renminbi under direct investment and securities investments continues to grow，and the cross-border direct investment in renminbi accounting for more than half of the total of cross-border settlements for direct investments.

Statistics from the Society for Worldwide Interbank Financial Telecommunication (SWIFT) show that there were more than 349,000 companies and 386 banks around the world that had launched cross-border renminbi business as of the end of March 2018. Foreign banks in 137 countries and regions had opened 5,028 interbank accounts in China.

At the same time，the panda bond market has expanded，gaining the attention of the international market and giving a boost to the internationalization of the renminbi. More companies are making renminbi bond offerings. These entities include overseas non-financial enterprises，financial institutions，international development agencies and foreign governments，with cumulative issuances of 245.7 billion yuan as of the end of the first quarter.

Policy Progress

In January 2018，the People's Bank of China issued its Notice on Further Improving the Cross-border Renminbi Business Policy to Promote Trade and Investment Facilitation. The main contents include the following:

The notice states which cross-border transactions now settled in foreign exchange can be settled in renminbi. It also deals with how banks can handle other cross-border renminbi receipts and payment services for individuals. This should be based on the principles of developing business，helping domestic individuals repatriate overseas income，and helping foreign individuals remit overseas renminbi income from China.

It also seeks to promote green development and support foreign investors participating in domestic carbon trading in renminbi. In order to encourage foreign investors to make direct investments in renminbi，it seeks to ease restrictions on opening bank accounts and the use of capital. It also attempts to facilitate  account opening and the use of capital use，and ensure that foreign investors can remit their income，dividends and other investment income in renminbi. Moreover，it seeks to simplify the procedures for issuing stock and bonds offshore，the collection of funds that are raised and the remittance of renminbi for use in China.

Crude Oil Futures

In March of this year crude oil futures settled in renminbi began trading on the Shanghai International Energy Trading Center. Trading volume has been growing since the contracts were launched. As of June 18，the cumulative volume of crude oil futures reached 3.871 million lots，worth 1.8 trillion yuan. The trading volume already ranks Shanghai among the top global markets，though still behind the key trading centers of New York and London. This has substantially enhanced the cross-border pricing power of the renminbi.

In May of this year，the second phase of the Cross-Border Interbank Payment System (CIPS) was officially launched. Relying on the Business Rules for Renminbi Cross-Border Payment System (document 72 of 2018 issued by the People's Bank of China) and based on international business terminology and the real-time full settlement (RTGS) model and the Timed Netting (DNS) model，it provides mixed settlement functions，standardizes the business behavior of participants，and strengthens day-to-day management and discipline. Trading hours have been extended from 5 - 12 hours to 5 - 24 hours + 4 hours，achieving full coverage of financial markets in all time zones around the world. CIPS direct participants can inject funds into CIPS accounts through the interbank money market according to their settlement needs，in order to meet the needs of domestic and foreign direct participants to make overnight liquidity adjustments. At present，CIPS has 31 direct participants and 695 indirect participants.

The People's Bank of China has made renminbi clearing arrangements in 23 countries and regions in Asia，Europe，America，Oceania and Africa. More than 60 foreign central banks or monetary authorities have included renminbi in official foreign exchange reserves. The People's Bank of China has signed bilateral currency swap agreements with central banks or monetary authorities in 38 countries and regions. The total amount of the agreement exceeds 3.3 trillion yuan，providing a convenient monetary environment for cross-border transactions in renminbi.

Case Studies

Case 1: Supporting Enterprises Going Global

The cross-border use of renminbi can provide financial support for major infrastructure projects，avoiding the risk of exchange rate fluctuations that may arise from the use of third-party currency settlements. It also ensures stable values in transactions between the two parties.

In late 2014，a certain Chinese company invested 250 million yuan in cement projects in Africa. It was necessary to import equipment from China and pay for engineering services. The use of dollars for the transactions would have involved multiple currency exchange transactions. In order to avoid exchange losses，it was determined that the project should use renminbi，from the capital contribution to payments for construction and equipment. That added 330 million yuan to the nation's renminbi exports，achieving a virtuous circle between the use of renminbi at home and abroad.

In April 2016，a Chinese energy company acquired an 11.72% stake in an Australian energy company for US$780 million，becoming the company's largest shareholder. The first acquisition payment was remitted in renminbi，amounting to 1.6 billion renminbi. At the same time，a commercial bank issued a financing guarantee of 1.5 billion yuan to provide guarantees for US$200 million fo