|Jinyi Develops New Trading Method|
On August 29, the Jinyi area of the Zhejiang Free Trade Zone received some good news. More than 80,000 aluminum pots with a combined value of 2.938 million RMB were declared at the Jinyi Comprehensive Bonded Zone and will be shipped to Nigeria by sea on September 2. At the same time, a batch of aluminum ingots worth 2.938m RMB will be shipped to China from warehouses of the Nigeria Wuhuanjin Supply Chain Co. This order is carried out by the Jinyi Comprehensive Bonded Area Development Co., the main body of a new trade mode. Within the existing policy framework, it will be carried out in a new bartering scheme without cross-border capital receipt and payment. This means that Jinhua has innovated a new trade form and accomplished the first order of barter trade in the Jinyi area.
Barter trade is an ancient way of trade, but it’s rare in the modern world. Barter is the earliest trading method and has continued to today. When the financial industry is highly developed, and currency is widely used as a universal equivalent, barter trade is unfamiliar to most people. But now the ancient trading method has been reborn with new ideas and new technologies and has the potential for another great development.
With the emergence of problems such as overcapacity and inventory backlog along with the general needs of companies to reduce operating costs and improve economic benefits, this ancient transaction method has become active again and has flourished in the fields of the Internet, big data, and blockchain. In the new era, it has been rejuvenated and evolved into a new circulation method.
At its core, barter is exchanging what you have for what you need. This reduces inventory and cash flow. “The trading method of barter conforms to today’s development trend and the needs of market entities; thus, it is expected to play a new role in this era,” said the director of the Municipal Free Trade Office. The new mode of barter can pep up the trade with areas that have foreign exchange shortages such as Africa, and countries that have difficulties in cross-border capital settlement such as Russia and Iran. Additionally, it can also promote the RMB internationalization strategy, help companies expand exports, and reduce the difficulty in collecting payments for goods.
In recent years, the Jinyi area has implemented the relevant requirements of the State Council on “supporting the construction of barter trade service platform” and “exploring a new barter trade model linking small commodity trade and bulk commodity trade and expanding cross-border RMB settlement channels.” With the support of customs, taxation, foreign management, and other departments we will jointly make a new type of barter trade that is denominated in RMB and exchanged for imported goods with equivalent export goods, without the need for cross-border capital receipt and payment. (By Luo Yi, translated by Wei Han, edited by Daniel Haws)