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The direct trading of the Chinese yuan and Japanese yen that beganfrom June 1 in Tokyo and Shanghai is "definitely a win-win game forboth sides," according to a senior economist of the AsianDevelopment Bank Institute. The direct yuan-yen trading could reduce the transaction cost andexchange risk in bilateral trading and investment, and Japanese andChinese companies involved will benefit from the new system. saideconomist Xing Yuqing in an exclusive interview with Xinhua. "However, the most important implication of the direct trading isthat the Japanese yen and Chinese yuan will be utilized more in thefuture. I think this is the major objective for the two governmentsto work together to promote bilateral direct trading," Xing said. Statistics of the Asian Development Bank Institute show that only0.3 percent of the Chinese commodities exported to Japan and 1.7percent of goods China bought from Japan were settled in yuan in2011, while trade deals settled in yen are slightly higher, as theinstitute's 2009 figures show that 18 percent of China's exports toJapan were settled in yen. "With the direct yuan-yen trading, the role of the U.S. dollar inbilateral trading between China and Japan would become less andless important. This might signify a gradual departure of the twocountries from the dollar," he said. The U.S. dollar has long been the vehicle currency for bilateraltrade and investment between China and Japan, and volatility of itsexchange rate is the major concern for everyone involved in tradebetween the two countries. To Xing, the direct trading agreement is also a major step for theinternationalization of the Chinese currency. "Before the Chineseyuan becomes an international currency, it should be a regionalcurrency first." Japan, the world's third largest economy and the second largesttrading partner of China, is a perfect partner to promote theutilization of yuan, or renminbi, he said. "That will build up a solid footing for renminbi on the way to be aregional currency and eventually become an international currency,"he said. "In my opinion, the next natural step for Japan is toreach an agreement with China to set up a renminbi offshore marketin Tokyo. Japan will benefit a lot from renminbi'sinternationalization." The yuan-yen direct trading will also inject vitality into Tokyo'sfinancial market, Xing said. According to the economist, the Japanese yen has been aninternational currency for decades but its share is very low, sothe internationalization of yen can be considered as a failure. Thetrading of the Chinese yuan, particularly yuan-denominated assetswill provide new business opportunities for Japanese financialinstitutions in the post-crisis era. From a long-term perspective, the yuan-yen direct trading will helpboth yuan and yen play a greater role in international trade andfinancing, and it may bring changes to the current internationalmonetary system, Xing said. Author Source xinhua Editor Yang Fan. We are high quality suppliers, our products such as Car Timing Belts Manufacturer , China Cogged V Belt for oversee buyer. To know more, please visits Cogged V Belt.
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