On June 22, the People’s Bank of China, together with other relevant authorities on mainland China, announced an expansion of the renminbi trade settlement program.

The program, which was introduced in July 2009, has been expanded to cover 20 provinces and cities* on the Mainland, and their trade transactions with any part of the world can be settled in renminbi.

Any enterprises in the relevant Mainland provinces and cities can settle their merchandise imports, service trades and other current account transactions in renminbi, while an expanded list of eligible enterprises will be able to settle their merchandise exports in renminbi.

Hong Kong Financial Secretary John C. Tsang welcomed the announcement by the Mainland authorities.

“This is certainly good news to corporates and the banking industry in Hong Kong,” Mr. Tsang said. “With an expanded scope of trade transactions that can be settled in renminbi, corporates will be able to better manage any exchange rate risks associated with their operations. Meanwhile, our banks can also provide trade-related services to customers not just in Hong Kong but also other parts of the world.”

The Chief Executive of the Hong Kong Monetary Authority, Norman Chan, said, “The expansion of the renminbi trade settlement is bringing the development of Hong Kong’s renminbi business to a new stage.

“With our established renminbi financial infrastructure and clearing arrangement, Hong Kong is well-positioned to serve the greater scope of renminbi financial intermediation activities. We look forward to working with the financial community in capturing the opportunities to the fullest extent,” Mr. Chan added.

* Beijing, Tianjin, Inner Mongolia, Liaoning, Shanghai, Jiangsu, Zhejiang, Fujian, Shandong, Hubei, Guangdong, Guangxi, Hainan, Chongqing, Sichuan, Yunnan, Jilin, Heilongjiang, Xizang and Xinjiang.