The Taipei Branch of Bank of China has acquired the rights to clear Yuan transactions in Taiwan. This decision has paved the way for usage of Yuan, the major currency of Chinese mainland on Taiwan. Incidentally, Taiwan is ruled separately because of the civil war that took place more than 60 years ago. The Communist Government of China considers Taiwan to be a renegade province till date and believe the same must unify with China. They won’t mind if they need to apply force for this, as already mentioned by several ruling party leaders of China.
The decision was announced by the Central Bank of China. Incidentally, Bank of China already clears Yun transactions in Hong Kong. The Shanghai branch of Bank of Taiwan was permitted the rights to act as a Yuan clearing back in last August, as an agreement was signed between Taiwanese and Chinese Government. The agreement also stated that individuals and corporate houses of Taiwan will be allowed to set up bank accounts in the mainland. This pact also paves the way for interbank trading of Yuan, which may create a new exchange rate for the currency. Incidentally, Yuan trading was only allowed in Hong Kong and China, prior to implementation of this pact.
This Yuan pact definitely highlights a growing economic relation between China and Taiwan. The process basically started with appointment of Ma Ying Jeou, the current president of Taiwan, in 2008. Ying Jeou has kind of moved away from his predecessor Chen Shui-Bian’s policy of greater independence for Taiwan and this has helped in bettering the ties between Taiwan and China.
Not only Taiwan, but, Chinese Government is trying to expand usage of Yuan in other trading partner countries such as Thailand, Singapore and Japan as well. They attempt to present Yuan as an important currency for global trade and investments. According to a report released by the Bank of China, in the first 9 months of 2012, the bank has processed Yuan worth $275 billion. The figures are 31% higher than the 2011 results.
Along with China, Taiwan has the biggest trade surplus in the world, based on the data provided by the Government. A recent report from Taiwan’s Straits Exchange Foundation states that the tariffs on imported goods from both the sides were reduced by a total of $490.1 million till October, 2012.