On August 3, the Hunan Provincial Department of Commerce held a press conference to release the results of the activity of 2022 African Diplomats Visiting the Pilot Zone for In-depth China-Africa Economic and Trade Cooperation.

During the event, Hunan Province unveiled the trial order model based on the use of local currency settlement (LCS) in the trade with African countries, and promoted the establishment of a state-owned trading platform for LCS in the trade with African countries.

Since 2021, Hunan Province has explored and completed 12 microcredit-based "one-to-one" barter trades with four African countries. On this basis, the Hunan government has overcome the time and space limitations in the conventional barter trade, and proposed a pilot plan of LCS in the trade with African countries together with the customs, foreign currency and taxation departments. According to the principle of overall hedging and dynamic equilibrium of imports and exports, the province has explored a barter-based new model integrating information flow, commodity flow, and capital flow with qualified African countries.

According to Yang Yi, head of the regional division of the Hunan Provincial Department of Commerce, the fundamental purpose of using LCS in the trade with African countries is to solve the cross-border settlement problem caused by the lack of foreign currency in African countries. This helps increase imports of African products, improve China-Africa trade structure and balance, and guarantee the receipts of Chinese export enterprises.

At the beginning of this year, the Hunan government has reported the pilot plan of LCS in the trade with African countries to the Ministry of Commerce. The trial order model is the preparatory work for the approval of the plan. At present, enterprises using the trial order model are sorting out their entire business processes for exporting Chinese mechanical and electrical equipment and importing African non-resource products.

This article is from the Hunan Provincial Government www.enghunan.gov.cn.

Translator: Xiao Juan

Chinese source: hunan. gov.cn