China has started a cross-border yuan center in a south-west province bordering Myanmar as that country opens up to foreign business, according to a Chinese government website.
The yuan center in the city of Ruili, in Yunnan province, will promote exchanging yuan with the Myanmar kyat, along with transporting and repatriating yuan, according to a statement on the Ruili website posted yesterday.
China, Myanmar’s biggest trading partner, has urged other countries to end economic sanctions as the southeast Asian country opens up its economy and ends a half century of isolation. Elections on April 1 allowed the country’s leading dissident, Aung San Suu Kyi, to take a seat in parliament.
Myanmar’s political changes may open a new trading route from China to the Andaman Sea and the Bay of Bengal, lowering shipping costs for exporters in central China, Dariusz Kowalczyk, senior economist and strategist with Credit Agricole CIB in Hong Kong, wrote in an e-mail.
“We expect an increase in trading volumes via Myanmar, and opening of the cross-border CNY center in Ruili will help accelerate the process,” Kowalczyk wrote.
Ruili aims to develop direct settlement as well as a clearing service, according to the statement. In mainland China, settlement of yuan takes place through a national system operated by the central bank.
The U.S. government loosened a ban on American investments in Myanmar this month, the strongest acknowledgment yet of the political and economic transformation put in motion by Myanmar’s government.
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