Pakistan and China are closing in to deal in Renminbi (RMB) and Pakistani Rupees (PKR) as Pakistan faces financial challenges, a Pakistani minister said.

Federal Minister for Board of Investment (BOI) Chaudhry Salik Hussain told Gwadar Pro that the talks between Pakistan and China were ongoing to finalize the matter.

“We can soon be dealing in RMB along with the US dollars. Both options can be utilised (side by side),” he added.

Earlier, Prime Minister Shehbaz Sharif directed the State Bank of Pakistan (SBP) to hold meetings with the Industrial and Commercial Bank of China (ICBC) and Bank of China for use of RMB/PKR for bilateral trade between China and Pakistan.

Prime Minister Shehbaz gave the instructions to SBP during a meeting with the Chinese businessmen held on May 30 this year.

RMB is the official currency of China and one of the world’s reserve currencies. It is also the eighth most traded currency in the world.

For the promotion of trade in the Chinese currency, a pilot project encompassing the introduction of ‘RMB pricing’ will be introduced in the first phase. In the second phase, RMB settlement and financing policies will be focused on.

The exchange rate for the currencies of both countries will be set in the China Foreign Exchange Trading System (CFETS) and in authorized banks declared as cross-border currency markets in China and Pakistan, according to the official details.

China and Pakistan share strong economic ties. Pakistan has largely imported machinery, transport equipment, iron, steel, yarn, and textiles from China. Meanwhile, China imported textile yarn, resource-based products, and fabrics from Pakistan.

Chaudhry Salik Hussain said that Pakistan and China will soon find a way out on the use of RMB/PKR.

He maintained that this would boost trade ties between the two friendly nations.

CPEC has given a strong boost to Pakistan’s economic growth and livelihood improvement and has delivered positive economic effects.

Pakistan’s rice exports to China crossed $225.25 million in the first quarter of the year 2022.

According to the General Administration of the Customs of the People’s Republic of China (GACC), the sales of broken rice increased up to 40.27% as compared to last year.

China has imported more than 601,574.052 tons of different varieties of rice this year from Pakistan. Rice exports to china increased up to 12.45% by volume, whereas last year only 534,946.42 tons were exported.

China had previously proposed to Pakistan to set up RMB Capital Circulation System to promote trade and transactions in the Chinese currency.