Taiwan, China step closer to yuan clearing system
TAIPEI, July 30 – Taiwan and its top trading partner China are close to creating a clearing system using China’s yuan currency, further tightening trade relations between the two and another step forward in the internationalisation of China’s currency.
A Taiwanese official, who asked not to be identified, said today the two sides could sign a memorandum of understanding as early as the end of August to create the clearing system. However, the system still needs the approval of both governments, the official said.
Initially, the system will allow trade transactions between the two sides to be settled directly in either yuan or Taiwan dollars, avoiding the current system of first having to convert either currency into US dollars, the official said.
China’s central bank declined to comment today, while an official at Taiwan’s central bank said the two sides had already reached a consensus on a clearing system, but there were still “processes to go through.”
The two sides have been discussing a clearing system for more than three years as trade ties have boomed, but political sensitivities over a mainland presence in Taiwan’s financial system have kept progress slow. The two remain politically divided and China claims Taiwan as its own territory.
Yesterday, China’s top official on Taiwan affairs, Wang Yi, told a cross-strait gathering that a clearing system is the next big issue for the two sides.
Representatives of China and Taiwan are set to meet in Taipei on Aug. 9 for a regular meeting at which they are expected to sign a much-delayed investment protection agreement. – Reuters