GOVERNMENT must consider trading directly with China using the Chinese currency yuan for easy transactions since the Asian giant is Zambia’s major trading partner, the Private Sector and Development Association (PSDA) chairperson Yusuf Dodia has said.
Mr Dodia said in an interview that China had become such a significant player in the world economy that now it had become impossible to ignore its currency. He said it was therefore important to directly trade with China using its currency because a lot of money was lost while converting the Kwacha to dollar and later to the yuan.
“China has become such a significant player in the world economy that now it has become impossible to ignore its currency because it has now become a world economic powerhouse.
“I think common sense dictates that if you are going to get Kwacha then buy dollar and later the Chinese currency in order to import from China, you are actually losing money because you are going into two levels of exchange transfers,” he said.
Mr Dodia said trading directly in yuan was a good business practice which should be adopted in Zambia.
“I think calls for trading in Chinese currency are very well justified and it is also becoming very clear that the rest of the world is recognising that Chinese currency has to be taken on board very seriously if those countries want to remain significant in the global economy.
“That is just good business practice and it is important that we begin to recognise that we do not need to go through the conventional system to trade with the outside world, we can go straight into the economy that we are trading with,” he said.
He said the recognition of the yuan as a major trading currency was a sign that China was significant to the world economy including that of Zambia.
“Why should we waste our time going into the dollar then to the Chinese currency when we can go direct to the Chinese currency and maybe save some money?
“So I think that any smart business person would rather go to the Bank of China here in Zambia and remit the currency to that factory so that I get my products directly without going through two exchange controls,” he said.
Mr Dodia said the yuan had by default become one of the world’s leading trading currencies.
“China being the largest producer of goods and services in the world, their currency is by default having to be recognised by international banks; it has not been on the foreign exchange listing of convertible currencies, but we are beginning to see that it has become very significant,” he said.
The International Monetary Fund on November 30, 2015 approved the yuan for inclusion in its elite basket of reserve currencies in what amounts to a major vote of confidence in Beijing’s economic reforms.