Five coastal cities in China will participate in a pilot project allowing the use of Renminbi (RMB) to settle cross-border trade payments.

The decision to involve Shanghai and four cities in Guangdong province - Guangzhou, Shenzhen, Zhuhai and Dongguan was made at a State Council meeting chaired by Chinese premier Wen Jiabao on April 8.

Last December, the Chinese government announced the pilot project to promote use of the RMB to settle bilateral trade payments with Hong Kong and ASEAN (Association of Southeast Asian Nations) members, but did not say which Chinese cities would participate.

The pilot was a milestones in China's efforts to internationalize the currency.

Last week, the EO reported that on the eve of the G20 meeting a Chinese government-backed research institute circulated a report to officials suggesting to internationalize the RMB by opening up the currency under China's capital account.

"From regionalization to internationalization, this is the roadmap for the RMB to become an international currency," said Xia Bin, who directed finance research under the Development Research Center of the State Council.

To date, China's central bank has signed currency swap agreements totaling 650 billion yuan with six monetary authorities, including Korea, Hong Kong, Malaysia, Indonesia, Belarus and Argentina.