In a bid to bolster the global presence of the yuan, China has expanded its yuan settlement program in cross-border trade to cover the entire nation.

In July 2009, China launched the pilot program in five cities including Shanghai and Guangzhou. The mechanism was widened to cover 20 provinces, municipalities and autonomous regions across the country in June 2010.

The extension is a crucial step in encouraging greater use of the yuan and better serving the needs of enterprises, said the People's Bank of China, the central bank.

In the first half of 2011, China's yuan settlement of cross-border trade surged to 957.57 billion yuan ($149.62 billion), increasing 13.3 times from that of the same period last year, according to statistics from the central bank.

Meanwhile, the Chinese Government plans to allow cross-border direct investment in the yuan to facilitate internationalization of the Chinese currency.

Foreign investors will be able to make direct investments in China with yuan legally obtained from overseas, said a draft released by the Ministry of Commerce, which is currently soliciting public feedback on the new rules.

The ministry said the yuan funds obtained through cross-border trade settlement and overseas issuance of yuan-denominated bonds or stocks are eligible for such direct investments.

However, those overseas funds cannot be used to invest in negotiable securities and financial derivatives in China directly or indirectly, nor to provide entrusted loans in the country or repay domestic or overseas loans.