Yuan Export Seller's Credit Interest Rate Formation Mechanism

Officially supported export credit agency (ECA), as a specialinstitution, has always been backed by public finance and budget accordingthe world ECA's history. With ECA a country can improve its goods andservices exportation, explore international market and resources, andpush up its competence in goods and services market. This is aninternational practice in the world. Many countries are supplyingconcessional credits with lower interest rate and longer payment term toits companies. But under the SCM in WTO framework, the subsidies for exportis prohibited. And WTO listed the interest rate subsidies as a typicalway.Years on, China has been facing more and more trade disputes sinceits foreign trade volume grows rapidly. The anti-dumping cases emergeabruptly followed by anti-subsidies cases. This is the meaningfulbackground for my research issue on Renminbi interest rate mechanism inexport seller's credit in China's officially supported export credits.The topics sure are very good for dealing with foreign anti-subsidiesinvestigation and interest rate market oriented reform. My research paperfocuses on K items in SCM and results a discovery that the interest ratesframed in the Gentlemen's Agreement can be a safe harbor to SCM'sprohibited subsidies under some circumstance.This paper also raised a RMB CIRR concept based on the analysis andexperiences of other countries' ECAs. That is Renminbi interest ratemechanism in export seller's credit in China's officially supportedexport credits should be transferred from the model decided by PBC to anew mechanism and it will be composed of RMB T-bonds rate plus 100 BPaccording to the OECD's CIRR but the interest rate matrix will be basedon different products and risks which is so called differentiated interestrate mechanism.With the special and differential treatment for developing membersin SCM, RMB export seller's credit can efficiently shave off the possibleanti-subsidies sue. The RMB interest rate in export seller's credit canbe lowered further if the price added subsidies accumulation to exporteris less than 2%.