File Photo:VCG

The People's Bank of China (PBC), China's central bank, announced on Tuesday that it has signed a cooperation memorandum with the National Bank of the Republic of Kazakhstan and the Bank of the Lao PDR to establish Chinese yuan clearing arrangements in the two countries.

The move will be beneficial for enterprises and financial institutions in China and Laos as well as Kazakhstan, allowing them to use yuan for cross-border transactions and further promoting bilateral trade and investment, the PBC noted.

"Laos and Kazakhstan are both important countries under the framework of the China-proposed Belt and Road Initiative (BRI), and using Chinese currency for transactions is a necessary choice to strengthen bilateral economic cooperation," Dong Dengxin, director of the Finance and Securities Institute of the Wuhan University of Science and Technology, told the Global Times on Tuesday.

Dong noted that since the opening of the China-Laos Railway, the two countries have seen a continuous increase in bilateral trade. According to Kunming Customs in Southwest China's Yunnan Province, over the nine months since the opening of China-Laos Railway, the Customs has supervised and released a total of more than 1.2 million tons of import and export goods, with a total freight value of 10.08 billion yuan ($1.44 billion).

"China and Kazakhstan are actively communicating to open an additional railroad crossing, which will further enhance the economic cooperation of the two countries. Therefore, using yuan for transactions will facilitate cross-border investment and trade, as well as reducing exchange costs," Dong said.

In addition, the yuan is increasingly becoming a safe haven currency for global investors due to its stability, as the US dollar climbs to near record levels. "Therefore, more and more countries especially those along the BRI will choose the yuan for cross-border transactions," Dong added.