China's central bank late Monday announced a dramatic expansion of its pilot program for cross-border yuan trade settlement to 67,359 exporters from the original 365 firms

The sharp increase is a significant step towards internationalizing the Chinese currency, and it surprised many market observers, who had expected the number to expand by at least double.

From December 3, firms on the list had been allowed to settle trade deals in yuan, and seek a tax rebate or tax exemption, the People's Bank of China (PBOC) said in a statement on its website.

The move would promote the development of trade-generated yuan settlement businesses and help make trade and investment more convenient, the statement said.

China's State Council, the Cabinet, announced in April a pilot program to allow exporters and importers in Shanghai and four cities in the Pearl River Delta bordering Hong Kong--Guangzhou, Shenzhen, Zhuhai and Dongguan--to settle cross-border trade deals in yuan.

In June, the PBOC expanded the trial scheme to 20 regions from the original five cities with successful results.

From June to November, Chinese banks handled a total of 340 billion yuan (about $50 billion) worth of yuan settlements for cross-border trade, more than seven times the amount in the initial trial period, said the statement.

(Xinhua News Agency December 6, 2010)