The Study On RMB Cross Border Trade Settlement Of China

China officially launched RMB cross border trade settlement in July2009under the stimulus of the international financial crisis in2008.Actually, it is also a long-term strategy of the internationalization of RMB.Since then, on be behalf of a series of supporting policy and the demand ofmarket, the business has made great achievements. By the end of the thirdquarter of2012, the accumulative amount of RMB cross border tradesettlement has been4.67trillion, and the average quarterly growth rate is112percent. Meanwhile, the ratio of RMB cross border trade settlement tothe total volume of foreign trade has experienced a sustained growth, from0.0024%to12.55%in the third quarter of2012. Benefit from the RMBcross border trade settlement, the Hong Kong RMB business that includeRMB deposit, RMB loan and RMB bond all make a big increase. Based onthis background, this paper carried out comprehensive research on ourRMB cross-border trade settlement.After introduce the business status, the author analysis the developmentfactors and risks of this new business. The driving factors include:1) wehave a huge volume of international trade settlement.2) The support ofgovernment policy.3) The need from the company.4) The currency swapsagreement signed by of country. The problem of the business include:1)RMB offshore market is narrow, the function is not perfect and the channelof investment and financing is not smooth.2) The lack of RMB forwardproduct.3) The domestic enterprises have a low bargaining power.4) Theratio of RMB cross border trade settlement to our total volume of foreigntrade is still very low.5) The distribution of foreign area that participates inthe RMB settlement is very uneven, which is mainly concentrated in HongKong, Singapore and other East Asia countries.6) RMB cross border trade settlement is lack of authenticity.For the integrity of the analysis, the paper also analyzes the inherentrisk of the RMB cross border trade settlement. This business maybe bringssystematic risk to our financial market as well as the entity economy. Sothe government should constantly improve the financial supervisionsystem, RMB settlement system and our financial market. Also we shouldstrengthen the jointed supervision and information sharing mechanismwith international financial supervision institutions. In order to have acomprehensive understanding of this business, the author also makes a costand benefit analysis, which include qualitative analysis and quantitativeanalysis. Under the quantitative analysis, the conclusion is that the cost ofthis business is far more than the benefit. So we should try to reduce thecost in the future.In order to provide a comprehensive suggestion to RMB cross bordertrade settlement, the paper chooses the Japanese yen to make a depthanalysis. Among all the international currencies, yen is the newest member.Also, compared with other developed countries, the Japanese economy ismost familiar with China. So it is on our most helpful when analyzing theexperience and lessons of the yen to be a cross border settlement currency.Combined the experience and lessons of the yen with the problems ofRMB cross border trade settlement, the paper then give some suggestions.1) Improve the related instruments of RMB cross border trade settlement.2)Improve the RMB output and return channel.3) Improve the RMBoffshore financial market.4) Improve the formation mechanism RMBexchange rate.5) Enhancing the differentiation and competitiveness of ourproducts.