Hong Kong's ambition to become an offshore yuan center is a step closer thanks to recent central government moves to expand the yuan's international role.

Among the most significant moves is an announcement by the State Council (China's Cabinet) early last month that exporters and importers in five mainland cities will be able to settle their cross-border trade deals in yuan under a pilot program.

The five cities include Shanghai in the Yangtze River Delta and Guangzhou, Shenzhen, Zhuhai and Dongguan in the Pearl River Delta. All have large numbers of export-oriented manufacturers in their surrounding regions and will initially likely only involve deals with the special administrative regions of Hong Kong and Macao.

No timetables for, or details of, the program have been made available.

But signs indicate the scheme could be implemented soon.

Li Feng, Shenzhen's deputy major, told Hong Kong reporters earlier last week that the city authority had chosen 100 import and export firms to participate in the pilot scheme.

He said he expects the Guangdong provincial government to approve the list soon.

Tu Guangshao, a Shanghai vice-mayor, also told media late last month that the city was selecting its first batch of companies to participate in the scheme.

The move to allow yuan settlement in cross-border trade will strengthen Hong Kong's role as a financial gateway to the mainland, Hong Kong's Secretary of Financial Services and the Treasury Chan Ka-keung said.

"Both our financial industry and trade between the two places will benefit immensely from this breakthrough," he said.

Analysts were uncertain on whether the move was intended primarily to help Hong Kong become an offshore yuan hub.

"I can't really speculate what the central government's ultimate intention is. It may not necessarily be intended to help Hong Kong become an offshore yuan hub. But it will be a breakthrough to that effect," said Irina Fan, a senior economist at Hang Seng Bank.

China's rapid growth and the scale of its economy naturally demand a bigger role for the yuan in the international arena, she said.

Yuan settlement for cross-border trade in Hong Kong would likely lead to other services such as yuan lending, issuing yuan bonds and yuan investment assets in the special administrative region, she said.

Hong Kong will enjoy a "first-mover advantage", although the central government may allow yuan settlement in trade with bordering Asian markets, such as ASEAN countries, effectively making them "first movers" too, the economist said.