Wuxi promotes cross-border RMB use

The Cambodian Sihanoukville SEZ, led by the Wuxi-based Hodo Group, has become the largest base for foreign-trade exports in Cambodia. [Photo provided to wuxinews.com.cn]

China Export & Credit Insurance Corp recently issued the country's first "One Contract, Two Currencies" export buyer's credit insurance policy for the thermal power plant project in Cambodia Sihanoukville Special Economic Zone, according to the Wuxi commerce bureau on Aug 15.

The thermal power plant project in the Sihanoukville SEZ will be undertaken by Wuxi Guolian Huaguang Power Engineering Co, with the aim of meeting the power demand of enterprises there and supporting the economic development of the Sihanoukville SEZ.

Taking into account the inconsistency between the currency of the commercial contract payment in the project's financing and the currency of the project's future income, the Wuxi branch of China Export & Credit Insurance Corp developed a new kind of export buyer's credit insurance policy named "One Contract, Two Currencies."

The insurance policy requires a syndicate of domestic and foreign banks to provide financing in RMB and US dollars, while China Export & Credit Insurance Corp will issue US dollar and RMB export buyer's credit insurance policies based on financing agreements.

The new insurance policy can effectively reduce currency exchange costs and avoid currency exchange rate risks. It is a new model of RMB settlement for China-Cambodia cross-border business, according to officials.

The financing syndicate has now completed the placement of all USD and RMB loans to meet the project's financing needs in a timely manner.