The government of Pakistan is considering a proposal to start using the Chinese yuan in trade with China, according to the Minister for Interior and Minister for Planning, Development and Reforms, Ahsan Iqbal.
"We are examining the use of yuan instead of the US dollar for trade between the two countries ," the minister told the media after the official launch of the Long Term Plan (LTP) for the China-Pakistan Economic Corridor (CPEC).
At the same time, China and Pakistan are also planning to enhance currency swap arrangements and create a bilateral payment and settlement system.
Bilateral trade between Pakistan and China was worth $13.8 billion in 2015 to 2016, a decade after the countries signed a free trade agreement.
The LTP includes cooperation between the countries in energy, information network infrastructure, road and rail connections, trade and industrial parks, tourism, agriculture, and poverty alleviation.
The plan will be implemented in three phases, the first ending in 2020, followed by another in 2025, with completion in 2030.
Under the plan, China and Pakistan intend to develop multi-level cooperation and strengthen policy coordination, as well as establish and improve the cross-border credit system and financial services.
Earlier this year, China pledged to invest $57 billion in Pakistan to fund the CPEC project as part of its "Belt and Road" initiative, which aims to build a 'New Silk Road' of land and sea trade routes across more than 60 countries in Asia, Europe, and Africa.
Iran & China seek to eliminate US dollar from bilateral trade
Interestingly, earlier this month China and Iran discussed bilateral trade in local currency rather than US dollar.
"Rial-yuan's bilateral monetary agreement can have a significant role in increasing the volume of trade between the two countries and in this regard, we have conducted a series of negotiations with the central bank of the Republic of China's president," the Central Bank of Iran's Governor Valiollah Seif said after talks with the visiting Chinese government political adviser Chen Yuan.
On his part, Chen said that Iran and China should develop their banking links and also underlined the unfairness of the existing financial system, dominated by a few developed countries. He added, other nations would do better if the unfair system is eliminated.
"We could use the experiences of European countries in establishing the euro as a common currency between many countries, which is not exclusively controlled by a single country. But until then, we need to utilize the maximum available capacities to expand our banking relations," Chen was quoted as saying by the Iranian media.
It may be pointed out that Iran has been pursuing the goal of eliminating the dollar in its trade, and has been trying to sign currency swap agreements with a number of countries.
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