ON FEBRUARY 6th, a few days before the Chinese new year, banks in Taiwan offered something new to their customers: deposit accounts in China’s currency, the yuan. The banks were full of seasonal generosity, offering much better terms than depositors normally enjoy. At Bank SinoPac, customers without two yuan to rub together can open an interest-bearing account with only one.
Deposit-taking and trading in yuan was made possible by a clearing agreement, signed in August between China’s central bank and its counterpart in Taipei (which one mainland newspaper referred to as Taiwan’s “central bank”, the quotation marks reminding readers that China bitterly disputes Taiwan’s claims to sovereignty, in monetary matters or anything else). That deal is only the latest example of China’s unconventional efforts to promote the use of its currency beyond its borders, even as it maintains controls on capital flows across them.
