The State Bank of Pakistan (SBP) has announced that all arrangements for using the Chinese currency for yuan-denominated L/C business are already in place.

Pakistan and China are looking to significantly boost bilateral trade and investment through the China-Pakistan Economic Corridor (CPEC).

Currency switch

Arrangements under the CPEC mean that Pakistani and Chinese banks will in due course be able to open import L/Cs in rupees and yuan.

The two countries anticipate that their currencies will eventually replace the US dollar in Pakistan-China trade.

Mutual benefits

The increase in trade and investment with China under the CPEC aims to provide long-term benefits for both the countries.

Pakistan's minister for planning and development, Ahsan Iqbal, suggested last year that the government was considering a Chinese proposal to use yuan instead of the US dollar for payments in all bilateral trade.

This article represents the views of the author and not necessarily those of the ICC or Coastline Solutions.