BEIJING, Jan 18 (INP): Venturing to replace the U.S. dollar with the Chinese yuan for bilateral trade will yield long-term benefit to Pakistan. A comprehensive bank policy was prepared whereby public and private enterprises in both countries can carry out financial activities in the Chinese Yuang (CNY), says a Chinese media’s report on Thursday. From now on, Pakistan's imports from China can be paid for in yuan rather than dollars. Not only that, Chinese companies investing in projects related to the China Pakistan Economic Corridor (CPEC) can bring in yuan-denominated funds that will yield profits in yuan. This facility is also available to non-Chinese companies involved in the CPEC. Additionally, the Industrial and Commercial Bank of China Ltd. (ICBC) in Pakistan has initiated a local yuan settlement and clearance arrangement so that yuan accounts can be opened to facilitate remittances and yuan-based transactions. As a policy, the Long-Term Plan of the CPEC for 2017-30 visualizes the strengthening of financial bonds between the "all-weather strategic partners" by giving the yuan equal status to the dollar in Pakistan. Only recently, Minister for Planning and Development Ahsan Iqbal and the Chinese Ambassador Yao Jing formally announced the long-term plan of the CPEC along with other measures to complement it. Financial co-operation between free trade zones will be increased and the formation of a RMB backflow mechanism will be facilitated. Describing China's long-term commitment, Ambassador Yao said there was room for improvement in the LTP if needed, "By no means is the LTP final and perfect, as it can be adjusted according to the ground realities." Until now, only the dollar was allowed for international trade by Pakistan's foreign exchange regime, and extending the same incentives to the yuan will take three years to implement. Justifying the practicality of using the Chinese currency, Pakistani economic analyst and former government adviser on finance Salman Shah explained that avoiding dollar transactions in the implementation of CPEC would "simplify matters very considerably" as the Chinese economy is now one of the biggest in the world. A free trade agreement will further benefit exports from Pakistan and lessen its huge trade deficit. Setting up of a cross-border inter-bank system to facilitate clearance and settlement claims by financial institutions will be the next step, doing away with any need for the complex international clearing system based in London and New York. Assessed at $13.8 billion in financial year 2015-2016, bilateral trade would hugely benefit as CPEC projects continue until 2030. Easing pressure on the country's foreign exchange reserves and helping them rise with CNY, economic indicators will also improve as Pakistani imports from China are more than $10 billion. The free flow of capital and legitimate funds will also accelerate as this bilateral currency exchange kicks in. In the meantime, Pakistan will continue to use the rupee domestically. INP/J/AJ