This landmark transaction follows a decision in June 2010 by China’s central bank, to extend a pilot program launched in July 2009 that permitted the use of RMB in cross-border trade between designated companies in mainland China and member countries of the Association of Southeast Asian Nations (ASEAN).

The ability to settle trade and other international payments in RMB provides clients in Saudi Arabia with more flexibility while determining payment terms with their suppliers in China.

China remains a key trading partner for the Kingdom, with its share of imports into the Kingdom having grown from 9.7 percent in 2007 to 11.3 percent (SR40b in 2009). This is expected to grow further with China being identified by Saudi traders as the most promising region for trade growth.

Moving the trade transaction to RMB also presents significant foreign exchange and hedging opportunities. Thirty percent of China’s exports are expected to be settled in RMB in the next five years.