The regional acceptance of yuan would cut transaction costs for trade deals with non-US dollar countries and regions, since these deals bypassed the US dollar, said Zhao.

Datuk Yong Ah Pwi, head of Malaysia-China Chamber of Commerce, who attended the Canton Fair, said Malaysian companies pinned great hopes on the use of the yuan with Chinese trading partners.

He said annual bilateral trade between Malaysia and China had exceeded US$50 billion. Expanding use of Renminbi in trade settlement between the two economies, which were mutually complementary in nature, would allow manufacturers from both sides to reduce costs and explore new trade areas.

Professor Xiao Yao, of the research center of foreign trade and international economic cooperation under the Guangzhou-based Guangdong University of Foreign Studies, said, "Along with future world economic recovery, developed nations are bound to recall a large amount of capital from emerging markets. Then China will have to depend on itself to maintain sufficient fluidity.

"The current acceleration of the yuan's international acceptance will no doubt reduce burdens on China," Xiao predicted.

However, many traders at the Canton Fair reckoned it would take years to expand the yuan's use.

Denis Keet, general manager of foreign trade division of Indonesian firm Dyll, said use of the US dollar for trade settlement was a habit that was difficult to abandon.

He suggested that Chinese traders need to demonstrate the advantages of using the yuan.

(Xinhua News Agency April 16, 2009)