PBOC expands use of RMB in cross-border loans

Allows non-financial companies to loan overseas affiliates.

The People's Bank of China said it will allow non-financial companies to use renminbi held within their organizations in China to extend loans to overseas affiliates. Affiliates may include companies that the China-based firms hold stakes in or companies that they have shareholders in common with.

The move will facilitate the renminbi’s use across borders in trade and investment despite Chinese government’s repressive controls over international fund flows.

PBOC also asked Chinese domestic banks to settle offshore cash withdrawals made by renminbi bank-account holders in renminbi with their overseas counterparts.

Analysts said China might soon reveal a plan that will allow the renminbi’s full convertibility under the capital account within the year and allow Chinese individuals make overseas investments.