This month the municipal government of Shanghai included its plans to establish a cross-border renminbi payment and clearing centre by 2020, as part of its 13th Five-Year Plan. The document renewed the local government's commitment to promoting Shanghai as a global renminbi settlement and clearing centre, saying it would promote two-way flows of renminbi and aim to establish a benchmark for pricing and renminbi assets in the future.

CIPS key to Shanghai RMB hub success

In July last year, the prospect of Shanghai becoming a global renminbi settlement and clearing centre by 2020 seemed to be in doubt when it was announced that a simplified version of China's international payments system would be launched. Reuters reported that the China International Payment System (CIPS) would only be used for cross-border yuan trade deals, rather than also including capital-related transactions, as originally envisioned. CIPS is seen as an important infrastructure that supports the mission to establish Shanghai as a global renminbi settlement and clearing centre by 2020. Economist in the region feared that a delay or downscaling of CIPS could slow the progress towards this vision and was a setback to Shanghai's push to challenge Hong Kong as an offshore yuan centre.

In the event, CIPS launched on 8 October 2015, as reported by CTMFile, and accepts payments in cross-border trade, direct investments, financing and personal remittances.

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CTMFile take: this renewed commitment will boost confidence among foreign investors looking at establishing links with Shanghai and trading in RMB.