China FTA a stepping stone for yuan’s internationalization

A free trade pact between Korea and China will likely bolster the international use of the yuan as more traders may use the Chinese currency for their transactions, a Chinese researcher said yesterday.

“The increasing bilateral trade and economic cooperation will provide a foundation for the development of the financial sector involving the two countries,” Dong Yan, a research fellow at the Chinese Academy of Social Sciences, said in a report.

“Korean exporters and importers will be able to reduce their financial costs through transactions in yuan.”
Korea and China kicked off bilateral free trade talks last month. The move is aimed at tearing down trade barriers between the two neighboring countries.

Seoul expects a free trade deal with China could help the economy grow by between 0.95 percent and 1.25 percent within five years of going into effect.

Yonhap