Despite the spectacular economic development China hasengineered, the use of the renminbi (RMB) has not grown at the samepace as the country's industries. Many U.S. businesses that sourcefrom China continue to pay their suppliers in U.S. dollars. Doingso is convenient, and it eliminates foreign exchange (FX) risk inthose transactions. It also costs more, and it puts these companiesat a disadvantage compared with businesses that are willing totransact in RMB.

As China has liberalized the RMB over the past decade, anincreasing number of European, Australian, and Asian companies havebegun making RMB-denominated deals. If China continues toexperience a credit squeeze and deceleration in economic growth,U.S. companies may find themselves under increasing pressure to usethe local currency when working with Chinese trading partners. Thetime is right to evaluate the pros and cons of paying and billingin RMB.