(Yicai Global) Jan. 3 -- State Bank of Pakistan, the Islamic republic's central bank, will permit the use of yuan as the settlement currency in trade with China it announced, Xinhua News Agency reported.
Chinese and Pakistani enterprises in both public and private sectors may freely use yuan in bilateral trade and investment activities, and the SPB has developed relevant rules to facilitate this.
Recent global and regional economic development, especially the rapid advancement of the China-Pakistan Economic Corridor under construction, has stoked expectations that yuan-denominated trade with China will rise dramatically, and this is in the long-term interest of both countries.
To boost bilateral trade and investment and bolster financial cooperation, PBOC and SBP signed their Bilateral Currency Swap Agreement worth CNY10 billion in December 2011, and renewed it in December 2014.
Pakistan exported USD1.62 billion in goods and services last year, while its imports from China were USD10.6 billion. The two countries are still negotiating a free trade agreement (FTA), as dawn.com reported today. Pakistan is a key link int China's Belt and Road initiative to revive the ancient Silk Road, and the China–Pakistan Economic Corridor coming into being centered on the port of Gwadar is a key route for the initiative to penetrate into the Central Asian heartland.